Federal Reserve Member Lisa Cook Sues Trump Over Removal Attempt

Federal Reserve Board member Lisa Cook has formally sued President Trump over his attempt to remove her from her position. The initial hearing for this lawsuit is scheduled for 10 AM Eastern Time on August 29, to be presided over by Washington D.C. District Court Judge Jia Cobb. Cobb, a 45-year-old African American woman, was appointed to the federal bench by Biden in 2021. Earlier this month, she blocked another attempt by Trump to expand presidential powers, this time by trying to quickly deport tens of thousands of immigrants fleeing violence or persecution in their home countries.

Cook was appointed to the Federal Reserve Board by President Biden in May 2022, becoming the first African American woman to serve on the board. Her term was set to expire in 2038. Throughout the year, she has supported the Federal Reserve's cautious approach, refusing to lower interest rates despite pressure from Trump.

Trump's ally, the director of the Federal Housing Finance Agency, accused Cook of fraud in 2021 when she applied for a loan, claiming she listed two properties in Michigan and Georgia as her primary residences to obtain more favorable loan terms. Trump argued that this behavior disqualified Cook from continuing her role at the Federal Reserve.

Cook's legal team, in a request for a temporary restraining order, argued that the loan dispute may have been due to "unintentional clerical errors" and that even if there were errors, they were not intentional fraud and caused no harm to anyone. The director did not explicitly accuse Cook of benefiting from the alleged fraud, so it does not constitute a valid reason for removal.

The Federal Reserve spokesperson stated that the Federal Reserve Act of 1913 allows the president to remove a board member only "for cause," which includes gross negligence, serious misconduct, and other circumstances that impair a board member's ability to perform their duties. The legislation ensures that monetary policy decisions are based on data, economic analysis, and the long-term interests of the American people.

Legal experts have noted that Trump's attempt to remove Cook may not meet the procedural requirements, as "for cause" typically involves misconduct in the role, not private actions before taking office. The allegations against Cook occurred in 2021, before she was appointed to the Federal Reserve.

This unprecedented move by the White House could lead to a prolonged legal battle, potentially escalating to the D.C. Circuit Court of Appeals and ultimately the Supreme Court. The Supreme Court, currently dominated by conservative justices, has expanded the scope of presidential powers since Trump took office, making the outcome of this lawsuit uncertain.

In May, the Supreme Court ruled in favor of the White House in a case involving the appointment and removal of officials in independent federal agencies. However, the ruling did not apply to the Federal Reserve, which operates under a unique structure and historical tradition, making it exempt from presidential removal powers.

The Federal Reserve Board consists of seven members, all appointed by the president and confirmed by the Senate. If Trump succeeds in removing Cook and appointing a replacement, his allies on the board would gain a decisive majority. Trump's interference in monetary policy has already shaken market confidence in the dollar and U.S. Treasuries, raising concerns about global financial instability.