Federal Reserve Governor Lisa Cook has rejected a renewed effort by President Trump to remove her from the central bank's board, with her attorneys telling the White House in a letter made public Wednesday night that the mortgage-fraud allegations behind the push "remain unfounded and untrue." The response sets up a second round of what would be an unprecedented legal fight over presidential power to fire a sitting Fed governor, arriving three weeks before the central bank's next interest-rate decision.
The clash traces back to an August 5 letter in which the White House told Cook that Trump was again weighing her removal and gave her 21 days to respond to accusations that she declared two properties as primary residences on mortgage applications, a designation that can lower borrowing costs. Cook has denied wrongdoing since the allegations first surfaced roughly a year ago. In their reply, attorneys Abbe Lowell and Norman Eisen told White House counsel David Warrington that any paperwork errors were unintentional and that no legal basis exists to remove her.
An inadvertent error is not fraud, as the President and a third of his cabinet should know because they reportedly did the same thing.
Abbe Lowell and Norman Eisen, Attorneys for Governor Lisa Cook, via WSLS News
The lawyers went further, framing the dispute as being about far more than real-estate paperwork.
These attacks on Governor Cook are not about real estate paperwork; they are an attempt by President Trump to force the Federal Reserve to bend to his will.
Abbe Lowell and Norman Eisen, Attorneys for Governor Lisa Cook, via WSLS News
A Fight the Supreme Court Left Unresolved
This is Trump's second attempt to oust Cook. His first, in late August 2025, prompted litigation that reached the Supreme Court, which allowed Cook to keep her seat while the case proceeded but left the president a path to try again if he gave her proper notice and a chance to contest the claims, the process now playing out. That earlier fight already marked the first time a president had sought to remove a Fed governor for cause, testing a legal standard that has never been used against the central bank's leadership before.
Cook's team has signaled it will challenge any formal removal order in court, forcing judges to weigh how much protection the Federal Reserve Act's for-cause standard affords a sitting governor. The underlying allegations trace to a criminal referral from Federal Housing Finance Agency Director Bill Pulte, who has separately referred New York Attorney General Letitia James, Senator Adam Schiff and Representative Eric Swalwell, all vocal Trump critics, for alleged mortgage fraud; no charges have been filed against Cook, and the Government Accountability Office is now examining Pulte's referral practices. A ruling against Cook would mark the first involuntary removal of a Fed board member in the institution's 113-year history.
What's at Stake for Rate Policy
The dispute is unfolding as the Fed's own leadership has changed. Kevin Warsh, who succeeded Jerome Powell as chair in May, delivers his first Jackson Hole address Friday, and investors are parsing his early remarks for clues on how the Fed will balance still-elevated inflation against a softening labor market. Should Trump ultimately succeed in removing Cook, an appointee of former President Biden, he would gain a majority of his own picks on the seven-member board, a level of influence over the rate-setting committee no modern president has held.
Markets have already been positioning around that uncertainty. Gold has climbed toward three-month highs and Treasury yields have wobbled in recent sessions as traders weigh the succession fight alongside Wednesday's inflation report, which showed the Fed's preferred gauge, the core personal consumption expenditures price index, rising 3.3% from a year earlier, in line with forecasts but still well above the central bank's 2% target.
For now, Cook remains in her seat and is expected to take part in the Fed's September policy meeting. The White House has not said what it will do next, though officials have given no sign they intend to drop the matter.
