Overview

• President Donald Trump sought to remove Governor Lisa Cook citing alleged false statements on a 2021 mortgage application, the first such attempt against a Federal Reserve governor.
• Cook sued on Aug. 28, arguing the attempt violates the Federal Reserve Act and her due process rights, and she is seeking an emergency injunction to block the firing.
• Under the Federal Reserve Act, governors can be removed only for cause, a standard legal experts say may not be met by uncharged, pre-appointment allegations that Cook suggests could stem from a clerical error.
• Economists warn that subordinating monetary policy to the White House or forcing rapid rate cuts could fuel higher inflation and raise long-term borrowing costs, even as Trump presses for much lower rates.
• If Cook is replaced, Trump’s appointees would hold a 4–3 edge on the board, potentially shaping rate debates and increasing leverage over decisions such as the reappointment of regional Fed presidents.