Trump Says He’s Prepared for Legal Fight with Fed's Cook

Bloomberg's Enda Curran breaks down Trump's move to fire Fed governor Lisa Cook for alleged mortgage fraud and the potential legal fallout as both parties say they are willing to see the fight through.

(Bloomberg) -- President Donald Trump said he was prepared for a legal fight with Federal Reserve Governor Lisa Cook after he moved to oust her from her post following allegations that she falsified mortgage documents.

The Fed, weighing in for the first time this week, said it would abide by any court decision in Cook’s legal challenge of her dismissal by Trump. A Fed spokesperson added the central bank has deferred any decision on Cook’s current working status, and noted there is no official business before the Fed board this week.

“Lisa Cook has indicated through her personal attorney that she will promptly challenge this action in court and seek a judicial decision that would confirm her ability to continue to fulfill her responsibilities as a Senate-confirmed member of the Board of Governors of the Federal Reserve System,” the Fed said in a statement.

Lisa Cook

Trump, speaking at a Cabinet meeting on Tuesday, said he was also prepared to abide by any court decision, but indicated he was not concerned about Cook’s challenge.

“Oh sure, always,” Trump said. “She seems to have had an infraction, and she can’t have an infraction — especially that infraction, because she’s in charge of, if you think about it, mortgages.”

Earlier Tuesday, Cook’s lawyer vowed to file a lawsuit over the president’s maneuver to oust her for cause from the Fed Board of Governors. Trump reiterated his concern over allegations Cook claimed on two different mortgage applications that a home would be her primary residence and said he already had some “very good people” under consideration to fill her spot.

“We’ll have a majority, very shortly so that’ll be great once we have a majority, and housing is going to swing and it’s going to be great,” Trump said.

He floated the possibility he could shift Council of Economic Advisers Chairman Stephen Miran — whom he nominated to fill a vacant board seat with a term expiring in January — to the seat held by Cook, with a term running until 2038.

“We’ll see what happens. Look, we just put a very good man in one position, we switch him to the longer term and pick somebody else. But we’re very happy with the person we have in there,” the president told reporters.

Trump’s remarks were the latest signal he had no intention to back down from a fight that has sparked backlash over concerns it could threaten the independence of the central bank — a bedrock assumption of US markets that underpins the nation’s credit ratings.

Cook said in a statement that Trump did not have any authority to fire her and that she would not resign. Abbe Lowell, her lawyer, said Cook intends to file a lawsuit challenging her firing.

“I will continue to carry out my duties to help the American economy as I have been doing since 2022,” Cook said.

Trump’s effort to fire Cook — the first Black woman to serve on the Board of Governors in Washington — dramatically escalates his effort to exert more control over the US central bank and sets up a legal challenge that could have major impacts on monetary policy.

If Trump succeeds in removing and replacing Cook, it provides the president, who has aggressively advocated for interest rate cuts and expressed frustration with Fed Chair Jerome Powell over his approach, a four-person majority on the Fed’s seven-member board.

A president has never before removed a Fed governor from office. Democratic lawmakers immediately denounced Trump’s effort.

“The illegal attempt to fire Lisa Cook is the latest example of a desperate president searching for a scapegoat to cover for his own failure to lower costs for Americans,” Elizabeth Warren, the top Democrat on the Senate Banking Committee, said in a statement. “It’s an authoritarian power grab that blatantly violates the Federal Reserve Act, and must be overturned in court.”

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