A Federal Reserve governor accused of mortgage fraud filed a lawsuit Thursday alleging her firing was "unprecedented and illegal."
Trump fired Federal Reserve Governor Lisa Cook, appointed by President Joe Biden, on Monday after Federal Housing Finance Agency Director William Pulte alleged she committed mortgage fraud.
Pulte said Cook owns properties in Georgia and Michigan but had separately listed both as her "primary residence" on different mortgage agreements. A primary residence can mean lower mortgage rates.
Cook hit back on Thursday with a lawsuit. She said the independence of the central bank was at risk.
He said allegations of wrongdoing don't meet the requirement for "cause" to terminate.
"This case challenges President Trump's unprecedented and illegal attempt to remove Governor Cook from her position which, if allowed to occur, would the first of its kind in the Board's history," Lowell wrote in the lawsuit. "It would subvert the Federal Reserve Act, which explicitly requires a showing of 'cause' for a Governor's removal, which an unsubstantiated allegation about private mortgage applications submitted by Governor Cook prior to her Senate confirmation is not."
U.S. courts have never weighed in on what constitutes "for cause" when removing a Federal Reserve board of governors member because it hasn't ever happened.
Cook's suit names Federal Reserve Chair Jerome Powell and the board of governors as defendants.
The lawsuit comes amid Trump's high-profile campaign to get the Federal Reserve to lower key interest rates. Trump has said the U.S. should have the lowest rates in the world, but the Federal Open Market Committee has taken a wait-and-see approach on rates over concerns about how Trump's tariffs would affect the economy.
