Desk Reports :
Federal Reserve (Fed) Governor Lisa Cook has filed a lawsuit against US President Donald Trump, alleging that the president has no constitutional authority to remove her. As a result, the long-standing tradition of independence of the US central bank is about to face a new legal test.
Cook stated in the lawsuit that according to the law, a Fed governor can only be removed with “good cause”. But Trump made an unprecedented announcement on Monday (August 25) that he would fire Cook. Trump alleged that Cook committed mortgage fraud in 2021 before joining the Fed. However, Cook denied the accusation, saying that even if the accusation is true, it cannot be a “legitimate reason” for his removal.
Cook has filed a petition in court seeking to declare Trump’s decision illegal and seek a temporary stay on it. The petition seeks an order that the Fed cannot take any action against him until the final verdict in the case.
The lawyers argued in their lawsuit that a college-age offense like breaking a zebra crossing would not be grounds for removal of the Fed governor.
The case is being heard by U.S. District Court Judge Zia Kabe, an appointee of former President Joe Biden. Legal analysts say the matter could eventually end up in the Supreme Court. The court recently indicated that the Fed could be considered an exception to the president’s direct control due to its special structure and historical role.
The incident has also had an impact on the markets. After Trump’s dismissal announcement, the U.S. dollar weakened against other major currencies and investors speculated that the Fed could cut interest rates next month.
Lisa Cook joined the Fed governor in 2022, nominated by President Biden. She is the first black woman to hold the position. Earlier, Trump also fired the first black female member of the National Labor Relations Board (NLRB), Gwynne Wilcox.
According to legal experts, the Fed’s law does not specify what is meant by “reason.” Now the court must explain whether the allegations against Cook can really be considered sufficient reason.
A Fed spokesman said they would accept any ruling from the court. However, the White House has not yet commented on the matter. Analysts believe that Trump’s move against Cook has created an uncertain situation not only for the independence of the US central bank, but also for the global economy.
