Federal Reserve Governor Lisa Cook has filed a lawsuit against President Donald Trump, arguing that he illegally tried to remove her from her post. The lawsuit, filed on Thursday, challenges Trump’s announcement earlier in the week that he had fired her, despite laws requiring cause for dismissal.
“This is a big case,” Jane Manner, an associate professor at Fordham School of Law, told CNN. “If we’re going to allow politics to determine the membership of the Fed, what does that mean for the future of the economy?”
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Trump’s accusations against Cook
Trump accused Cook of committing fraud on mortgage applications, allegations his administration has since referred to the U.S. Department of Justice for review. Cook has not been charged with any crime.
Cook’s response
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Trump’s announced firing of Cook is the first time a president has attempted to remove a Federal Reserve governor in the central bank’s 111-year history.
In her lawsuit, Cook argues Trump violated the Federal Reserve Act by attempting to remove her. The law states that the president must show cause to fire Fed governors.
“Even if the President had been more careful in obscuring his real justification for targeting Governor Cook, the President’s concocted basis for removal — the unsubstantiated and unproven allegation that Governor Cook ‘potentially erred in filing out a mortgage form prior to Senate confirmation’ — does not amount to ‘cause’ within the meaning of the FRA and is unsupported by caselaw,” the suit reads.
She also said her firing violated her legal rights by failing to grant her due process and give her proper notice of the accusations made against her so that she could respond to the allegations in a hearing.
“Governor Cook received neither notice nor a hearing before her purported firing,” the lawsuit said. “This allegation about conduct that predates Governor Cook’s Senate confirmation has never been investigated, much less proven.”
White House defense
Trump officials insist the firing was justified. “The President determined there was cause to remove a governor who was credibly accused of lying in financial documents from a highly sensitive position overseeing financial institutions,” White House Spokesperson Kush Desai said in a statement on Thursday.
Trump has indicated he’s ready for a prolonged legal battle.
“We need people who are 100% above board, and it doesn’t seem to me like she was,” Trump said about Cook. According to the Wall Street Journal, Trump wants to swiftly move on from Cook and name a replacement.
What happens next?
Cook is seeking a temporary restraining order, with a hearing scheduled for Friday. Legal experts say the case could set precedent on how much job security Fed governors truly have.
