Federal Reserve Governor's Lawyer Sues Trump Over Illegal Termination Claim

Federal Reserve Governor Lisa Cook’s attorney has declared that President Donald Trump’s attempt to remove her from her post is an “illegal action” and announced plans to pursue legal action to block the termination. Abbe Lowell, a prominent Washington attorney, stated that Trump lacks the authority to fire Cook based on a referral letter alone and has no factual or legal foundation for the action [1]. The lawsuit is expected to test the boundaries of presidential power over the Federal Reserve, an institution traditionally insulated from political influence [2].

Trump’s move, if pursued successfully, could reshape the Fed’s long-standing independence, potentially impacting its ability to conduct monetary policy free from political pressure. The central bank has long maintained that the long tenures and removal protections for its governors are essential to ensuring that monetary decisions are made based on economic data and the long-term interests of the public [3]. However, the Fed’s recent statement avoided directly criticizing Trump’s actions and did not clarify whether Cook will continue to serve during the legal proceedings [4].

Legal experts argue that the president’s claim to fire Cook, who was appointed by President Joe Biden in 2022, is legally uncertain. The Supreme Court has historically been cautious about allowing the president to remove officials from independent agencies without clear justification. However, recent rulings suggest a shift in the court’s willingness to grant such authority in some cases [5]. Lev Menand, a law professor at Columbia University, noted that while the firing is likely illegal, Trump may argue it is constitutionally permissible, a strategy that has succeeded in limited cases this year [6].

The controversy centers on allegations made by Bill Pulte, a Trump appointee at the Federal Home Loan Bank Board, who accused Cook of claiming two primary residences in 2021 to obtain more favorable mortgage terms. Such claims, if proven, could potentially justify her removal under the “for cause” provision outlined in the Federal Reserve Act. However, Scott Alvarez, the Fed’s former general counsel, emphasized that allegations alone are insufficient to establish cause, as the official must be given an opportunity to respond [7]. Cook has denied the allegations and stated she will not resign, asserting that Trump has no legal authority to terminate her [8].

Trump has been increasingly vocal in his criticism of the Fed, particularly regarding its interest rate policies. He has pressured Federal Reserve Chair Jerome Powell to lower rates, arguing it would help reduce the federal government’s interest burden on its $37 trillion debt. Trump has also recently appointed or nominated three members of the Fed’s board, and if his attempt to replace Cook succeeds, he would hold a 4-3 majority on the board [9]. The potential shift could impact the Fed’s ability to maintain its current monetary policy stance and could affect broader financial markets.

The legal battle could ultimately reach the Supreme Court, where it may clarify the limits of presidential authority in removing officials from independent agencies. The outcome may set a precedent that could affect future appointments and dismissals at the Fed and other similar institutions. The case highlights the tension between the president’s executive power and the structural independence of key regulatory bodies in the U.S. government [10].

Sources:

[1] https://fortune.com/2025/08/26/lisa-cook-lawyer-lawsuit-sue-trump-illegal-termination-federal-reserve/