Fed’s Lisa Cook Challenges Trump’s Power to Fire Her Amid Rate-Cut Push

Fed Governor Lisa Cook has indicated that she has no intention of stepping down from the Federal Reserve, despite Trump’s attempt to fire her. Her lawyer has revealed that they will challenge the president’s power to remove her even as he continues to push for a rate cut.

Lisa Cook To Sue Trump Over Firing

According to a CNBC report, the Fed Governor’s lawyer, Abbe Lowell, has said that they will file a lawsuit challenging her removal by the president. The lawyer claimed that Trump has no authority to remove the Federal Reserve Governor.

Lowell further remarked that Trump’s attempt to fire Lisa Cook based solely on a referral letter lacks any factual or legal basis. In line with this, he stated that they will be filing a lawsuit challenging this “illegal action.”

As CoinGape reported, Trump fired the Fed Governor yesterday in an unprecedented move, marking the first time in U.S. history that a president has fired a member of the Fed board. The law provides that the president can only fire a member of the board “for cause.”

Trump justified this move based on the fact that the Department of Justice (DOJ) is currently investigating Lisa Cook for mortgage fraud, a move that the FHFA Chairman, Bill Pulte, claimed was done to secure lower interest rates.

Therefore, the president claimed that Cook cannot continue in her position, considering that the American people need to have faith in the Fed, which is responsible for determining interest rates.

The Push For A Fed Rate Cut

Trump’s motives in firing Lisa Cook are in question, as it comes at a time when the president is pushing for interest rate cuts, with the September FOMC meeting fast approaching. Notably, the Fed Governor isn’t the first to have faced a criminal referral. Last month, Trump ally Rep. Anna Paulina Luna criminally referred Fed Chair Jerome Powell over perjury claims.

In an X post, market commentator The Kobeissi Letter stated that the president is making this move to fire the Fed Governor because it would give the Trump-appointed Fed Governors the majority on the Fed Board. Notably, Trump remarked during a cabinet meeting today that they will have a majority shortly on the Fed.

If Lisa Cook leaves, it would mean that four out of the seven Fed Governors, excluding Jerome Powell, would be Trump appointees. The Kobeissi Letter noted that this would materially increase the number of rate cuts ahead.

Therefore, the market commentator declared that this case would be pivotal as President Trump calls for a 300 basis points (bps) of rate cuts. They noted that this has never occurred in the Fed’s history.

The Fed has already made a statement on the ongoing Lisa Cook saga, stating that it would abide by any court decision on whether Trump has the authority to fire the Fed Governor. The spokesperson for the U.S. Central Bank also noted that Cook has already indicated plans to challenge the president’s action in court.

In the meantime, the crypto market has its eyes on a September Fed rate cut. CME FedWatch data shows that there is an 86.3% chance of a 25 bps rate cut at the FOMC meeting next month.