Trump Seeks to Remove Fed Governor Lisa Cook

The Legal Battle Over Lisa Cook's Federal Reserve Position

President Donald Trump has been actively attempting to remove Federal Reserve Governor Lisa Cook from her position, despite recent documents that cast doubt on his claims that she committed mortgage fraud. These allegations have become a central point in the ongoing legal battle over her tenure at the central bank.

Loan records obtained by Reuters and other media outlets reveal that Cook listed a second home in Georgia as a "vacation home" in 2021, prior to her appointment to the Federal Reserve. This detail contradicts previous accusations made by William Pulte, the director of the Federal Housing Finance Agency, who claimed that Cook had identified two properties—her Georgia home and another in Michigan—as primary residences. Such a misrepresentation could potentially constitute mortgage fraud. However, no evidence has been presented to support this claim.

Trump used these allegations as a basis for his attempt to fire Cook, arguing that it provided him with the authority to replace her with an ally. Critics argue that such an action would violate longstanding rules that prevent political interference with the central bank’s operations. Despite this, Trump sent a letter to Cook on August 25, stating that the alleged mortgage fraud justified his decision to remove her. A judge later ruled that Cook cannot be fired while her lawsuit challenging the removal is still pending.

Legal Proceedings and Judicial Challenges

The Trump administration has since requested the appeals court to overturn the judge’s ruling. On Sunday, the Justice Department reiterated its request for a stay, which, if denied, would prompt Trump to appeal directly to the Supreme Court. The next Fed meeting is scheduled to begin on Tuesday, adding urgency to the case.

Cook’s legal team has strongly contested the allegations, calling them a “smear campaign” aimed at increasing the president’s control over the central bank. Abbe Lowell, one of Cook’s attorneys, stated that the Trump administration is ignoring publicly available facts that refute their claims. He criticized the use of cherry-picked social media posts from the FHFA director, arguing that they do not hold up under scrutiny.

In its filing, the Justice Department has challenged Cook’s argument that the president cannot fire a Fed official for misconduct that occurred before their appointment. While Fed officials are generally protected from removal, the president does have the authority to remove them “for cause.” This authority, however, has never been tested or exercised before. Trump is asserting that his power to remove officials is not limited to the time they are in office.

Executive Authority and Judicial Review

More controversially, the Trump administration is arguing that the president’s determination of “cause” for removal is not subject to judicial review. In its filing, the Justice Department stated that the president’s decision is “not subject to judicial second-guessing.”

This case raises significant questions about the limits of executive authority and the relationship between the president and the Federal Reserve. Legal experts suggest that the Supreme Court may need to address the issue quickly, given the potential implications for the independence of the central bank.

A New Ally for Trump at the Fed

While the outcome of the Cook case remains uncertain, Trump is expected to gain at least one new ally at the Fed when the central bank begins its two-day meeting. Later today, the Senate is anticipated to approve Stephen Miran, who currently serves as chair of the White House Council of Economic Advisers, to fill a vacant seat on the seven-member Federal Reserve Board.

Miran has indicated that he will take a leave of absence from his current role while serving at the Fed but plans to return to the White House when his term ends in January 2026. This development marks the first time in 90 years that a White House official has held a direct role in setting monetary policy, signaling a potential shift in the balance of power within the Federal Reserve.