WASHINGTON — Federal Reserve Gov. Lisa Cook will sue President Donald Trump’s administration to try to prevent him from firing her, her lawyer said Tuesday.
“President Trump has no authority to remove Federal Reserve Governor Lisa Cook,” said Abbe Lowell, a longtime Washington lawyer who has represented figures from both major political parties. “His attempt to fire her, based solely on a referral letter, lacks any factual or legal basis. We will be filing a lawsuit challenging this illegal action.”
The case is likely to end up at the Supreme Court and could more clearly define the limits of the president’s legal authority over the traditionally independent institution. The Fed exercises expansive power over the U.S. economy by adjusting a short-term interest rate that can influence broader borrowing costs for things like mortgages, auto loans, and business loans. Trump, a Republican, has repeatedly demanded that Chair Jerome Powell and the Fed’s rate-setting committee cut its rate to boost the economy and reduce interest payments on the government’s $37 trillion debt pile.
If Trump succeeds in removing Cook from the Fed’s board of governors, it could erode the Fed’s political independence, which is considered critical to its ability to fight inflation because it enables the Fed to take unpopular steps like raising interest rates. A less-independent Fed could leave Americans paying higher interest rates, because investors would demand a higher yield to own bonds to offset potentially greater inflation in the future, pushing up borrowing costs throughout the economy.
Trump appointed two members of the board, Christopher Waller and Michelle Bowman, in his first term and has named Steven Miran, a top White House economist, to replace Gov. Adriana Kugler, who stepped down unexpectedly Aug. 1. If Miran’s nomination is approved by the Senate and Trump is able to replace Cook, he would have a 4-3 majority on the Fed’s board, which votes on all interest rate decisions, along with five of the Fed’s 12 regional bank presidents.
Legal experts say the Republican president’s claim that he can fire Cook, who was appointed by Democratic President Joe Biden in 2022, is on shaky ground. But it’s an unprecedented move that hasn’t played out in the courts before, and the Supreme Court this year has been much more willing to let the president remove agency officials than in the past.
“It’s an illegal firing, but the president’s going to argue, ‘The Constitution lets me do it,’” said Lev Menand, a law professor at Columbia University and