Lisa Cook takes the oath of office, becoming the first Black woman to serve on the Fed’s board of governors in May, 2022.Patrick Semansky/The Associated Press
In an unprecedented move, U.S. President Donald Trump said that he’s firing Federal Reserve Governor Lisa Cook – marking a sharp escalation in his efforts to exert greater control on one of the most powerful financial institutions in the world.
Trump took to social media to announce that he would be removing Cook, effective immediately, over allegations that she committed mortgage fraud before she joined the board. In response, Cook said that she would not step down – and maintained that the president has no authority to fire her.
“I will continue to carry out my duties to help the American economy as I have been doing since 2022,” she said in an emailed statement.
On Thursday, Cook filed a lawsuit against the Trump administration, claiming the President has no power to remove her from office. The case sets up a legal battle that could reset long-established norms for the U.S. central bank’s independence.
Cook made headlines three years ago when she became the first Black woman to serve on the Fed’s board of governors, which votes on the central bank’s key interest rate decisions. Prior to her appointment to the board, she was a longtime economics professor and also held roles in the Clinton, G.W. Bush and Obama administrations.
Here’s what to know about Lisa Cook.
U.S. President Donald Trump on Monday said he was firing Federal Reserve Governor Lisa Cook over alleged improprieties in obtaining mortgage loans, an unprecedented step that could test the boundaries of presidential power over the independent monetary policy body should it be challenged in court.
Reuters
What does Cook’s lawsuit against the Trump administration say?
Cook’s lawsuit said Trump violated a federal law allowing him to remove a Fed governor only “for cause” when the Republican president took the unprecedented step on Aug. 25 of announcing he would fire her.
Trump has accused Cook of committing mortgage fraud in 2021, a year before she joined the central bank’s governing body.
Cook also filed a motion seeking a temporary restraining order declaring that Trump’s effort to fire her is unlawful and to bar the Fed from taking steps to remove her pending further litigation.
In the court filings, Cook said an unsubstantiated allegation about conduct that took place before she was confirmed to her position at the Fed does not amount to cause. She denied committing mortgage fraud, but said that even if she had it would not justify her removal.
“The President would not have ’cause’ to remove a Federal Reserve Governor even if he possessed smoking gun evidence that she jaywalked in college,” Cook’s lawyers wrote in the lawsuit.
The lawsuit also accused Trump of violating her right to due process under the U.S. Constitution by firing her without notice or a hearing.
The lawsuit has not been tested in court.
If the courts uphold Trump’s firing of Cook, it would significantly increase the president’s control over one of the few remaining independent agencies in Washington. Most observers expect the case to end up at the Supreme Court.
How long has Cook served as a Fed Governor?
Cook was appointed to the Fed’s board by President Joe Biden in 2022. Her nomination was opposed by most Senate Republicans, and she was approved on a 50-50 vote with the tie broken by then-Vice President Kamala Harris.
When she took office, Cook became the first Black woman to serve as a Fed Governor in the institution’s over century-long history. She initially filled an unexpired term and was reappointed the following year. Her appointment runs through January 2038.
What did Cook do prior to her role at the Fed?
Cook has taught economics and international relations at Michigan State University, and was previously also on the faculty of Harvard University’s Kennedy School of Government.
She has received degrees from Oxford University, Spelman College and the University of California, Berkeley. Some of her most well-known research has focused on the impact of racial violence on African-American innovation, and consequently wider economic growth.
Also prior to her appointment to the Fed, Cook served as a senior economist on the Council of Economic Advisers under President Barack Obama from 2011 and 2012 – as well as a senior adviser on finance and development in the Treasury Department’s Office of International Affairs from 2000 to 2001, under Presidents Bill Clinton and George W. Bush.
What does a Fed Governor do?
Fed governors vote on the central bank’s interest rate decisions – as well as other issues of financial regulation.
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Board members are appointed by the president and confirmed by the Senate. But unlike cabinet secretaries – who serve at the pleasure of the president, for example – Fed governors take on 14-year terms that are staggered in an effort to insulate the Fed from political influence.
The political independence of the Fed is considered critical to its ability to fight inflation because it enables the central bank to take unpopular steps, like raising interest rates. If bond investors start to lose faith that the Fed will be able to control inflation, they will demand higher rates to own bonds – pushing up borrowing costs for the U.S. government as well as consumers’ mortgages, car loans and business loans.
What is the Trump administration accusing Cook of?
The Trump administration has accused Cook of mortgage fraud. Bill Pulte, a Trump appointee who heads the Federal Housing Finance Agency, made the accusations last week – alleging that Cook had claimed two primary residences, in Ann Arbor, Michigan, and Atlanta, in 2021 to get better mortgage terms. Mortgage rates are often higher on second homes or those purchased to rent.
In a letter addressed to Cook that Trump shared on Truth Social Monday night, the president said that the “American people must have the full confidence in the honesty of the members entrusted with setting policy and overseeing the Federal Reserve” – and that he did not have confidence in Cook’s integrity in light of her “deceitful and potentially criminal conduct.”
The law allows a president to fire a Fed governor “for cause,” which typically means for some kind of wrongdoing or dereliction of duty. But establishing a for-cause removal usually requires some type of proceeding that would allow Cook to answer the charges and present evidence, which hasn’t happened in this case.
Cook’s lawyer, Abbe Lowell, said on Tuesday that she would be filing a lawsuit to challenge Trump’s action – maintaining that his attempt to fire Cook “lacks any factual or legal basis.”
While presidents have clashed with Fed chairs before, no president has ever sought to fire a Fed governor before. And critics say these accusations are being used as a tool by Trump to gain control of the central bank. Forcing Cook off the Fed’s governing board would provide Trump an opportunity to appoint a loyalist.
Have any other government officials been accused of mortgage fraud?
Yes. Pulte, whose agency regulates mortgage financiers Fannie Mae and Freddie Mac, has targeted several government officials with mortgage fraud claims in recent weeks.
“If you commit mortgage fraud in America, we will come after you, no matter who you are,” Pulte wrote on social media platform X following Trump’s action against Cook. Still, all of the allegations he’s raised so far have been against individuals that have clashed with Trump.
Beyond Cook, Pulte has raised similar allegations against Sen. Adam Schiff, D-Calif., and New York Attorney General Letitia James. Schiff led Trump’s first impeachment, while James sued Trump’s company over alleged fraud for falsifying records.
With files from Globe staff