A lawyer for Lisa Cook on Friday urged a U.S. judge to let the Federal Reserve governor keep her job while she fights President Donald Trump's attempt to fire her in a stunning assault on the central bank's independence.
The case in the U.S. District Court in Washington D.C. could provide Trump with expansive power over the Fed, which has traditionally been shielded from political pressure as it makes tough, complicated decisions about whether to raise interest rates to fight inflation or lower them to encourage hiring and economic growth.
Trump has sought to fire Cook over allegations that she committed mortgage fraud when she purchased a home and condo in 2021, the year before President Joe Biden appointed her to the Fed's governing board.
Trump has repeatedly criticized the Fed — and its chair, Jerome Powell — for refusing to cut interest rates. The central bank has left its benchmark rate unchanged this year, partly because it is waiting to see whether the big taxes — tariffs — that Trump is slapping on foreign products will push inflation higher. Cook has voted against a cut, along with most board members.
Arguments in the court Friday centered on what constitutes “cause,” which in this case are the unproven accusations of mortgage fraud.
In an exchange with U.S. District Judge Jia Cobb, Cook’s lawyer, Abbe David Lowell, said Trump’s motivations are clear. “He’s already said he wants a majority (on the Fed board). He’s bragged that he’s going to get it.’’
If Cook's firing is allowed to stand, it would likely erode the Fed's longstanding independence from day-to-day politics. No president has ever fired a Fed governor in the agency's 112-year history. Economists broadly support Fed independence because it makes it easier for the central bank to take unpopular steps such as raising interest rates.
Cook has asked the court to issue an emergency order that would prevent her firing and enable her to remain on the seven-member board of governors while her lawsuit to the overturn the firing makes its way through the courts. The case may end up before the U.S. Supreme Court.
The district court ruling is not expected until after Labor Day — although Judge Cobb said she would seek to expedite the case.
In court Friday, the Justice Department’s Yaakov Roth, who represented the Trump administration at the hearing, complained that Cook had not offered an explanation for anything questionable in her mortgage documents or a defense against the fraud allegations.
The allegations remain just that, leveled by Bill Pulte, Trump’s appointee to the agency that oversees mortgage giants Fannie Mae and Freddie Mac.
And late Thursday, Pulte, said that Cook had allegedly committed fraud on a third property, a condominium in Cambridge, Massachusetts, in April 2021.
Pulte said in a social media post that Cook classified the condo as a “second home,” but in financial disclosure documents filed in 2022 through 2025 with the government, she described it as an “investment/rental” property. Pulte added that mortgage rates and down payments for second homes can be lower than for investment properties.
Pulte also alleged, without evidence, that Cook may have rented out two properties in Ann Arbor, Mich. and Atlanta, which were the focus of a criminal referral he made last week and which he said she has claimed as her principal residence.
In a statement, Cook’s lawyer, Lowell, decried “an obvious smear campaign aimed at discrediting Gov. Cook ... Nothing in these vague, unsubstantiated allegations has any relevance to Gov. Cook’s role at the Federal Reserve, and they in no way justify her removal from the Board."
The law governing the Fed says the president can't fire a governor just because they disagree over interest rate policy. Trump has repeatedly demanded that the Fed reduce its key ate, which is currently 4.3%. Yet the Fed left it unchanged for the last five meetings.
The president may be able to fire a Fed governor “for cause,” which has traditionally been interpreted to mean inefficiency, neglect of duty, or malfeasance. Cook's lawyers argue that it also refers only to conduct while in office. They also say that she was entitled to a hearing and an opportunity to rebut the charges.
“The unsubstantiated and unproven allegation that Governor Cook ‘potentially’ erred in filling out a mortgage form prior to her Senate confirmation — does not amount to ‘cause,’” the lawsuit says.
Trump has attempted to fire a number of leaders from a host of independent federal regulatory agencies, including at the National Transportation Safety Board, Surface Transportation Board, Equal Employment Opportunity Commission, and Nuclear Regulatory Commission, as well as the Fed.
The Supreme Court declined to temporarily block the president from firing directors of some independent agencies earlier this year while those cases move through the courts. Legal experts say the high court this year has shown more deference to the president's removal powers than it has in the past.
Still, in a case in May, the Supreme Court appeared to single out the Fed as deserving of greater independence than other agencies, describing it as "a uniquely structured, quasi-private entity.” As a result, it's harder to gauge how the Supreme Court could rule if this case lands in its lap.
Pulte's charge that Cook has committed mortgage fraud is one he has also made against two of Trump's biggest political enemies, California Democratic Sen. Adam Schiff and New York Attorney General Letitia James, who has prosecuted Trump. Pulte has ignored a similar case involving Ken Paxton, the Texas attorney general who is friendly with Trump and is running for Senate in his state’s Republican primary.
Cook's lawsuit responds by arguing that the claims are just a pretext “in order to effectuate her prompt removal and vacate a seat for President Trump to fill and forward his agenda to undermine the independence of the Federal Reserve.”
If Trump can replace Cook, he may be able to gain a 4-3 majority on the Fed’s governing board. Trump appointed two board members during his first term and has nominated a key White House economic adviser, Stephen Miran, to replace Adriana Kugler, another Fed governor who stepped down unexpectedly Aug. 1. Trump has said he will only appoint people to the Fed who will support lower rates.
FILE - Federal Reserve Chairman Jerome Powell, left, talks with Board of Governors member Lisa Cook, right, during an open meeting of the Board of Governors at the Federal Reserve, June 25, 2025, in Washington. (AP Photo/Mark Schiefelbein, File)
FILE - Federal Reserve Board of Governors member Lisa Cook listens during an open meeting of the Board of Governors at the Federal Reserve, June 25, 2025, in Washington. (AP Photo/Mark Schiefelbein, File)
