Former Federal Reserve Governor Lisa Cook has filed a lawsuit to remain on the Fed board of governors, following Donald Trump’s announcement that he is removing her from her position. The lawsuit, filed Thursday, asks the court to rule the president’s action illegal and determine that unsubstantiated charges do not constitute grounds for removal under federal law. “The charges are pretextual to cover Trump’s attempt to undermine the Fed’s independence,” Cook’s attorneys state. The case has not been assigned to a judge and she has not been charged with anything.
CNN notes that the lawsuit sets the stage for a potentially high-stakes legal battle with significant implications for the Fed and White House power, even as President Trump moves to consolidate his control over parts of government once considered free from political influence.
The case is legally complex, CNN adds, given Trump’s belief that he can fire her for reasons that haven’t been proven and without completing an investigation.
The law that established the Fed doesn’t clarify what constitutes “just cause” for removing board members, nor does it specify the process for their removal. No president has ever fired a Fed member and the law has never been tested in courts.
The case will likely reach the Supreme Court where the conservative majority has allowed, albeit reluctantly, Trump to fire officials from other agencies, though it recently hinted that the Fed may be a rare exception as an agency not subject to direct White House control.
What the charges against Cook involve
Just last Monday, Trump posted a letter on social media addressed to Cook, informing her that he had sufficient “reasons” to fire the central bank official.
The letter referenced fraud charges related to mortgage loans first brought to light by Federal Housing Finance Agency Director Bill Pulte. The loans were taken a year before Cook’s appointment to the Fed by Joe Biden.
The fraud charges involve two properties she owns, both of which appear to have been designated as her primary residence.
The Trump administration has stated it is investigating other potential political opponents of the president for alleged loan fraud, including New York Attorney General Letitia James and California Senator Adam Schiff.
