The Fed is facing a direct clash with the White House and preparing for a courtroom showdown after Governor Lisa Cook filed a lawsuit against President Donald Trump, who claimed Monday that he had fired her over mortgage fraud allegations.
The central bank said on Tuesday that it would follow whatever decision the courts hand down and made it clear it stands by Cook as she challenges her removal.
This legal fight, which could land before both Congress and the Supreme Court, is now about whether Trump even has the power to fire a Senate-confirmed Fed governor.
The central bank’s official statement said Lisa, through her attorney, would be “promptly challenging” Trump’s attempt in court and would seek a ruling to confirm her right to stay in office. That lawsuit is now in motion.
Fed board confirms Lisa is staying as court decides her fate
The Fed broke its silence Tuesday with a sharp reminder that only Congress, through the Federal Reserve Act, determines how and when a Fed governor can be removed. Governors serve long, fixed terms, and can only be taken off the board “for cause.”
The central bank didn’t say whether Trump’s claim qualifies, but it warned that those protections exist for a reason: to stop monetary policy from being politicized.
“Long tenures and removal protections for governors serve as a vital safeguard,” the Fed said, “ensuring that monetary policy decisions are based on data, economic analysis, and the long-term interests of the American people.”
The central bank also doubled down on its commitment to remain independent and to carry out its duties “as established by law.” That includes promoting employment, maintaining stable prices, and ensuring a functioning financial system.
Trump, speaking at the White House, told reporters he’s ready to let the courts settle this. “I abide by the court, yeah, I abide by the court,” he said. But he also predicted that Lisa’s removal would let him flip the board in his favor.
“The Fed’s board will soon be comprised by a majority of my appointees,” he said. That would give him more leverage to push interest rates lower, something he has repeatedly demanded since retaking office.
Lisa has not stepped down. She said Monday night that she would keep doing her job at the Fed, despite Trump’s announcement. When asked whether she was working at the D.C. headquarters or remotely, the Fed did not respond.
Trump claims “cause,” Lisa’s lawyer says “no authority”
Lisa’s lawyer, Abbe Lowell, pushed back hard. “Trump has no authority to remove Cook,” he said. “His attempt to fire her, based solely on a referral letter, lacks any factual or legal basis.” Lowell confirmed that a lawsuit is being filed to challenge what he called an illegal action.
Meanwhile, the White House insists Trump acted lawfully. In a written statement, Kush Desai, a spokesman for the administration, said the president had the legal right to act under 12 U.S.C. 242, a federal statute governing the Federal Reserve Board.
“The President exercised his lawful authority to remove a governor,” Desai said, adding that Lisa was “credibly accused of lying in financial documents from a highly sensitive position overseeing financial institutions.”
The fight over Lisa’s position is no longer just about a job. It’s about power, control of the Fed board, and the limits of executive authority. The Fed’s top officials, including Chair Jerome Powell, have not made individual comments, as they tend to almost always don’t.
KEY Difference Wire : the secret tool crypto projects use to get guaranteed media coverage
