Federal Reserve board of governors member Lisa Cook sued President Trump on Thursday over his “unprecedented and illegal attempt” to remove her from her position.
She asked a judge to block her removal from the board to “safeguard” its congressionally mandated independence, allowing her and the Fed at large to “continue its critical work.”
“The operational independence of the Federal Reserve is vital to its ability to make sound economic decisions, free from the political pressures of an election cycle,” the complaint reads.
It sets up legal battle that could redefine the president’s power over an institution traditionally seen as independent from the political whims of the White House, a new front in Trump’s quest to expand executive control.
The Federal Reserve Act says the president can only remove members of the governing board “for cause.” The courts have never weighed exactly what that means because no president has sought to remove a Fed governor, until now.
Trump claimed in his Monday letter firing Cook that he does have cause to remove her, pointing to a criminal referral from the Federal Housing Finance Agency that suggests she may have made false statements on one or more mortgage agreements.
The referral alleges Cook illegally deemed two properties in Michigan and Georgia her “primary residence,” a declaration that can result in a lower interest rate.
“The American people must be able to have full confidence in the honesty of members entrusted with setting policy and overseeing the Federal Reserve,” Trump wrote. “In light of your deceitful and potentially criminal conduct in a financial matter, they cannot and I do not have such confidence in your integrity.”
Cook argues in her complaint that the allegations, which she has not had a chance to respond to, outside the legal action, don’t meet the legal requirements to cut her loose.
“President Trump does not have the power to unilaterally redefine ‘cause’ — completely unmoored to caselaw, history, and tradition — and conclude, without evidence, that he has found it,” the complaint reads.
Instead, she suggests her firing stems from Trump’s desire to take greater control of the Fed, pointing to the president’s long-held frustration with the central bank over its refusal to lower interest rates amid uncertainty around his trade agenda and the volatility of markets.
Trump’s battle with the Fed has often manifested in attacks directed at Federal Reserve Chair Jerome Powell, whom he has criticized as a “stubborn MORON” and also weighed firing. Powell and the board of governors are also named as defendants in the lawsuit.
“It is clear from the circumstances surrounding Governor Cook’s purported removal from the Federal Reserve Board that the mortgage allegations against her are pretextual, in order to effectuate her prompt removal and vacate a seat for President Trump to fill and forward his agenda to undermine the independence of the Federal Reserve.”
White House spokesman Kush Desai said in a statement that Trump exercised his “lawful authority” to remove Cook for cause.
“The President determined there was cause to remove a governor who was credibly accused of lying in financial documents from a highly sensitive position overseeing financial institutions,” Desai said. “The removal of a governor for cause improves the Federal Reserve Board’s accountability and credibility for both the markets and American people.”
The Fed declined to comment, and Cook’s legal team pointed to the complaint.
Updated at 10:52 a.m. EDT