Date: August 28, 2025
Washington, D.C. — Federal Reserve Governor Lisa Cook has taken the unprecedented step of filing a lawsuit against President Donald Trump, as well as the Federal Reserve Board and its chair, Jerome Powell, in response to Trump’s attempt to remove her from office. The legal challenge raises significant constitutional and institutional questions about the independence of the central bank.
What’s at Issue?
Timeline:
On August 25, 2025, Trump posted a letter on social media announcing he had fired Cook, alleging she was involved in mortgage fraud. Cook, however, maintains she has done nothing wrong.
On August 28, 2025, Cook filed a federal lawsuit in the U.S. District Court for the District of Columbia.
Legal Grounds:
The lawsuit contends that Trump’s move violated the Federal Reserve Act, which allows removal of a Fed governor only “for cause”, a standard widely interpreted to require proven misconduct such as malfeasance or neglect of duty. Cook argues the allegations are unsubstantiated and that Trump bypassed due process.
She has also requested a temporary restraining order and an injunction to block her removal while the case proceeds.
Political and Institutional Stakes
This marks the first time in the Federal Reserve’s 112-year history that a president has attempted to remove a sitting governor.
The case is being overseen by Judge Jia M. Cobb, appointed by President Biden.
Legal experts warn the lawsuit could reach the Supreme Court, potentially setting a historic precedent over presidential authority vs. central bank independence.
Should Trump succeed in removing Cook, it would enable him to install another ally, potentially tipping the Fed’s board in his favor at a critical moment for U.S. monetary policy.
The broader concern: A ruling permitting this removal could seriously undermine the long-standing political independence of the Federal Reserve.
Market Reaction
The stock market has not changed much, which is surprising. The S&P 500, Nasdaq, and Dow Jones have all risen slightly in recent days. Market analysts say that calm may be coming from hopes for lower interest rates and uncertainty over the court’s decision.
What’s Next?
A hearing is scheduled for Friday, August 29, 2025, to consider Cook’s request for an emergency injunction.
Legal watchers say this could escalate into a landmark decision defining the boundaries between executive power and the autonomy of independent federal agencies.
Lisa Cook, appointed in 2022 and the first Black woman to serve as a Fed governor, continues to argue that no lawful justification exists for her dismissal and that the president acted unilaterally and without due process.
