The tug-of-war between presidential authority and the independence of the Federal Reserve is back in the spotlight. Former President Donald Trump has set his sights on removing Federal Reserve Governor Lisa Cook, a move that raises pressing questions about legality, politics, and the future of the nation’s central banking system.
While the Supreme Court has already signaled limits on a president’s ability to fire Fed governors, Trump appears determined to press forward, citing allegations that could qualify as “cause” under the Federal Reserve Act.
Trump’s Push to Reshape the Fed
Trump has made no secret of his frustration with the Federal Reserve over interest rates. His attempt to oust Cook comes with the clear intention of placing a loyalist on the board who will support lowering rates. Within hours of announcing his plan to terminate her, Trump openly expressed that the move would soon give him a majority aligned with his monetary agenda.
Lisa Cook, a highly regarded economist, finds herself at the center of this storm. The timing and motivation behind Trump’s push raise concerns that the independence of the Fed could be compromised in favor of political gains. Yet, whether or not the effort succeeds hinges on one phrase in the law: removal “for cause.”
The Allegations Against Lisa Cook
The controversy began with Bill Pulte, head of the Federal Housing Finance Agency and a vocal Trump ally. Pulte accused Cook of mortgage fraud, pointing to a series of home loans she obtained before joining the Fed.
According to his referral letters to the Department of Justice, Cook claimed multiple properties as principal or primary residences — a designation that typically provides lower mortgage rates and tax advantages.
1. In 2021, she allegedly listed a Michigan property as her principal residence while also securing a mortgage on a Georgia home as a primary residence. That second property was reportedly rented out shortly after.
2. A third mortgage in Massachusetts was marked as a “second home,” though tax filings described it as an investment property.
According to allegations now under DOJ review, Cook may have received preferential loan terms under circumstances raising red flags. Her attorneys counter that clerical oversights are to blame and highlight that the loans took place before she assumed her Fed position. Even so, the matter is serious. Should the claims be proven, they could damage her standing and give Trump legal grounds to press for her ouster.
The Legal Hurdle
Under the Federal Reserve Act of 1913, governors can only be removed “for cause.” What exactly qualifies as cause is the crux of Cook’s lawsuit challenging her dismissal. Judge Jia Cobb, who is handling the case, has suggested that a president’s political motives are secondary to whether there is evidence to justify removal. Put simply, even if Trump is acting with partisan intent, the court’s attention will be on the substance of the allegations.
Judge Jia Cobb, overseeing the case, indicated that a president’s motivations are less important than the factual basis for removal. In other words, even if Trump’s intent is politically driven, the court will likely focus on whether the allegations themselves hold weight.
This interpretation could work in Trump’s favor. The allegations alone — even if not yet proven in criminal court — may be substantial enough for a judge to consider them cause for removal. Cook’s defense that the issues predate her tenure may not shield her, since the benefits of the transactions extended into her time as a governor.
Why the Courts May Side With Trump
Two factors suggest Trump’s position could ultimately prevail. First, courts tend to defer to presidential authority in cases involving cause-based removals. Judges rarely overturn a president’s determination unless there is clear evidence of abuse or error. Trump’s claim of cause, supported by pending investigations, may be enough to withstand judicial scrutiny.
Second, upholding the removal on cause grounds allows courts to avoid ruling on the broader constitutional question of presidential power over the Federal Reserve. By siding with Trump, courts can resolve the matter without confronting the complex balance between executive control and Fed independence.
The Risks for Cook and the Fed
For Lisa Cook, the risks are enormous. She must not only fight to regain her Fed seat but also contend with the possibility of a criminal probe. The DOJ’s investigation could drag on for years, yet the shadow of suspicion alone is enough to weaken her credibility in the role.
For the Federal Reserve, the case carries broader consequences. If Trump removes Cook and replaces her with loyal appointees, decisions on rates and monetary policy could look politically driven. That impression would threaten the Fed’s independence and chip away at public trust in its ability to steer the economy fairly.
A Legal Battle With Political Overtones
Trump’s attempt to remove Lisa Cook sits at the intersection of law and politics. The allegations of mortgage fraud give him a plausible claim of cause, even as his motives remain openly political. Courts are likely to defer to his authority, sparing themselves from a constitutional showdown while leaving the Fed’s independence vulnerable to perception.
Cook’s future now depends on both the outcome of her wrongful termination case and the ongoing criminal investigation. The larger issue — how much influence a president should wield over the Federal Reserve — remains unresolved, but this case could shape that debate for years to come.