Washington, Aug. 27, 2025 – Lisa Cook, a governor on the Federal Reserve Board, sued President Trump, the Board of Governors of the Federal Reserve System, and Fed Chair Jerome Powell on Thursday, alleging that the president’s move to fire her violated his executive authority and illegally deprived her of her due process right to respond to accusations that she committed mortgage fraud.
The high-stakes case poses a test for how much influence a US president can exert over the nation’s monetary policy.
Cook, 61, asked the District of Columbia’s federal district court for an injunction immediately confirming her status as an active member of the Board of Governors and to make a series of declarations to “safeguard her and the Board’s congressionally mandated independence.”
“The president’s actions violate Governor Cook’s Fifth Amendment due process rights and her statutory right to notice and a hearing under the Federal Reserve Act,” the six-count complaint stated.
The lawsuit’s actions against the Board and Chair Powell, it said, were limited to the extent that any individual Fed Governor is able to “effectuate” the president’s attempted termination.
Cook has refused to resign from her post in the wake of a termination letter signed by the president that was made public on Monday.
Trump’s letter asserts his authority to fire the Fed governor “for cause,” based on the White House’s allegations of mortgage misconduct.
Cook responded on Monday, saying that the “for cause” justification for her termination did not exist.
“I will not resign,” she said. “I will continue to carry out my duties to help the American economy as I have been doing since 2022.”
Cook’s clash with the administration adds to a list of similar legal actions that challenge the president’s authority to fire executive branch members.
Cook’s lawsuit, the most high-profile litigation to date, was filed in the District of Columbia’s federal district court.
Her claim tests the central bank’s degree of independence from executive branch influence, a legal gray area that has attracted the Supreme Court’s attention, though it has not been squarely in a decision earlier this year, the high court singled out the Federal Reserve by essentially describing it as more independent than other executive branch agencies that are also classified as independent.
In that case, Trump v. Wilcox, the court expanded the president’s authority over two independent agencies, the National Labor Relations Board (NLRB) and the Merit Systems Protection Board (MSPB), by allowing him to terminate officials at both agencies, while distinguishing the agencies from the Federal Reserve.
Unlike the NLRB and MSPB, the court said, the Fed is “a uniquely structured, quasi-private entity” with a distinct historical tradition rooted in the collapse of its central bank predecessors.
All three executive branch agencies operate independently of direct presidential oversight, and their officials are protected by statutes that limit the president’s power to remove them from their posts.
However, the court’s reference to the Fed’s predecessors, the First and Second Banks of the United States, highlights that both banks failed due to a loss of the public’s trust that was fueled by political abuses, including favoritism for connected elites and foreign influencers. (Yahoo/Finance)
