Fed governor fired by Trump fights back: ‘I will not resign’ 

Federal Reserve Governor Lisa Cook is pushing back against President Donald Trump's decision to fire her over mortgage fraud allegations, arguing that he does not have legal cause to do so.

Trump announced that he was terminating Cook in a letter he posted on social media on Aug. 25. But in a statement that her attorney, Abbe Lowell, shared with The New York Times, Cook said "no cause exists under law" for her removal.

"I will not resign," she said. "I will continue to carry out my duties to help the American economy as I have been doing since 2022."

Lowell told The Associated Press on Aug. 26 that Cook will be challenging her termination in court.

How we got here: Trump's decision to fire Cook is the latest in a series of battles that have played out between the president and members of the Fed this year.

Trump previously called for Fed Chair Jerome Powell to resign — and reportedly showed members of Congress a drafted termination letter — over fraud allegations involving an ongoing renovation of the Fed's headquarters. He has also called for Powell's resignation over the Fed's freeze on short-term interest rates.

Mortgage fraud allegations: The conflict involving Cook began earlier this month when Federal Housing Finance Agency (FHFA) Director Bill Pulte suggested that she may have committed mortgage fraud in connection with a home in Michigan and another in Georgia. On Aug. 15, Pulte referred the matter to the U.S. Department of Justice, which agreed to investigate the allegations.

Cook pushed back against Trump's and Pulte's calls for her to resign, saying in an Aug. 21 statement that she had "no intention of being bullied to step down" and was willing to "answer any legitimate questions and provide the facts" about her financial history.

An unprecedented move: Trump's letter said he found "sufficient cause" to remove Cook, "effective immediately" — becoming the first president to fire a Fed governor. He cited Pulte's criminal referral, which alleged that Cook signed mortgage documents in mid-2021 claiming two different homes as her primary residence.

The documents predate Cook's time with the Fed, which began in May 2022. Her current term is set to end in January 2038.

"The American people must be able to have full confidence in the honesty of the members entrusted with setting policy and overseeing the Federal Reserve," Trump's letter said. "In light of your deceitful and potentially criminal conduct in a financial matter, they cannot and I do not have such confidence in your integrity."

Questionable legality: While a president can fire a Fed governor "for cause," some legal experts have questioned whether this threshold has been met. Though Cook has been accused of mortgage fraud, she has not been charged or convicted.

In comments published by PBS News, Lev Menand, a Columbia Law School professor, described Cook's termination as "a procedurally invalid removal under the statute," and Brookings Institute senior fellow Sarah Binder said it "seems like a fig leaf to get what [Trump] wants, which is muscling someone on the board to lower rates."

Some have also raised concerns about the central bank's independence moving forward in light of the president's pressure on Powell to lower rates and efforts to remove Cook. Peter Conti-Brown, a professor at the Wharton School of the University of Pennsylvania, told The New York Times that Trump "will run riot over the Federal Reserve by using the formidable resources of the U.S. government against our own central bank" if he gains a majority at the Fed.

What happens next: The situation involving Cook has rapidly evolved since the allegations first surfaced. As of midday on Aug. 26, Cook had said that she does not intend to leave her position.

Lowell told The Associated Press that Trump "has no authority" to remove Cook. "His attempt to fire her, based solely on a referral letter, lacks any factual or legal basis," his statement said. "We will be filing a lawsuit challenging this illegal action."