Ten days ago, Lisa Cook was one of seven members of the Federal Reserve’s board of governors, playing an important but hardly leading role in the central bank’s debate over the path of interest rates.
Today, the future of the Fed and whether it will continue to operate as an independent institution or become subject to the whims of the White House rests largely on her shoulders.
Ms. Cook finds herself in that position because of President Trump’s decision on Monday to seek her ouster, and her own decision on Thursday to file a lawsuit challenging her attempted dismissal. Those two actions set the stage for a landmark legal battle, one that is bound for the Supreme Court, over the president’s explicit attempts to take control of the central bank.
“Governor Cook has been thrust into a role she did not seek and doubtless would prefer to shed — suddenly being cast in a larger-than-life struggle to defend an institution that has helped foster the economic and financial success of the U.S. over the post-World War II period,” said David Wilcox, who is a senior fellow at the Peterson Institute for International Economics and a former leader of the Fed’s research and statistics division.
On Friday, a federal judge in Washington will hold the first hearing in the case, which will focus on Ms. Cook’s request for a temporary restraining order. If the court grants the order, it will allow her to continue serving on the Fed’s board while she contests her firing.
Ms. Cook was not expected to be in this position. Mr. Trump has made no secret of his desire for lower interest rates, or of his anger at central bank officials for refusing to deliver them. But for months Mr. Trump had focused his ire on Jerome H. Powell, the Fed chair, repeatedly threatening to fire him and, at one point, even waving around a letter that purported to do so.
Then, last week, Mr. Trump turned his attention to Ms. Cook after an administration official accused her of mortgage fraud tied to her purchase of two homes in 2021, before she joined the Fed. She has not been charged with any crime.
Ms. Cook, who said from the start that she would not be bullied into resigning, must now defend not only herself but also the Fed as a whole. She must do so without the formal institutional backing of the central bank, which for legal reasons cannot defend her directly. Instead, she will be represented at Friday’s hearing by her own private attorney.
In fact, Ms. Cook’s lawsuit names as a defendant not just Mr. Trump but also Mr. Powell and the Fed’s board of governors. The decision to include her associates at the central bank reflected a need to prevent anybody from executing what the president had demanded before the courts ruled on the case. Still, at least on paper, Ms. Cook is suing two of the world’s most powerful men and one of its most important institutions.
“I can’t imagine how hard this must be, the weight of Fed independence hanging on her decisions,” said Heather Boushey, who was an economic adviser to President Joseph R. Biden Jr. when he nominated Ms. Cook to her post.
If Ms. Cook proves victorious, the president’s capacity to strong-arm officials into leaving the Fed will be seriously curtailed and the central bank’s independence bolstered.
If she loses, it could open the door for Mr. Trump and future presidents to install loyalists at the Fed. That could undermine the central bank’s longstanding and highly prized independence, which has become foundational to the health of the world’s largest economy as well as the smooth functioning of the global financial system.
In the short term, Ms. Cook’s departure would give Mr. Trump his second opportunity in a matter of weeks to appoint someone to the board who is willing to follow his direction. Earlier this month, Mr. Trump said he would nominate a top economic adviser, Stephen Miran, to a governor seat that was unexpectedly available after Adriana Kugler stepped down five months before her term ended.
Mr. Trump’s nominees to the seven-member board would then enjoy a majority, giving them sway over big decisions related to interest rates, the rules and regulations governing Wall Street and internal matters like staffing.
“The stakes could not be higher, for the Federal Reserve and for our system of separation of powers, and also for the American economy,” said Amit Agarwal, an attorney at Protect Democracy, an organization that has sued Mr. Trump over his efforts to oust officials at other independent agencies. “If this termination is allowed to stand, the Federal Reserve will no longer have any insulation from presidential control, and that means the death of the Federal Reserve as an independent agency.”
A Groundbreaking Appointment
Ms. Cook is perhaps an unlikely figure to carry such a weight.
She grew up in Georgia during desegregation — she and her sisters were among the first Black students to attend their schools — and studied philosophy as an undergraduate at Spelman College in Atlanta. She has said she turned to economics after hiking Mount Kilimanjaro alongside a British economist.
Ms. Cook stood out as one of relatively few Black women in economics, something that remains true nearly 30 years after she earned her doctorate in the field.
“Economics is neither a welcoming nor a supportive profession for women,” she and a colleague wrote in a New York Times opinion essay in 2019. She added, “But if economics is hostile to women, it is especially antagonistic to Black women.”
Mr. Biden nominated Ms. Cook to the Fed board in 2022. She was narrowly confirmed after Vice President Kamala Harris broke a 50-50 tie in the Senate. She was the first and so far only Black woman to serve as a Fed governor.
“One of the biggest mistakes anyone could make is to underestimate her moral resolve and commitment to causes in which believes,” said Mr. Wilcox, who is also the director of U.S. economic research at Bloomberg Economics. “Though she did not ask for this role, she is superbly equipped to step into it.”
What Role Does the Fed Play?
Until a court rules otherwise, Ms. Cook is still an active governor at the Fed. The central bank stipulated as much in a rare statement related to the president’s recent actions against the institution and its members.
The statement highlighted the protections laid out in the Federal Reserve Act, which designates that governors have 14-year terms and can be removed by presidents only for “cause,” which has tended to mean malfeasance while in office or a dereliction of duty.
“Long tenures and removal protections for governors serve as a vital safeguard, ensuring that monetary policy decisions are based on data, economic analysis and the long-term interests of the American people,” a spokesperson said, while stressing that the Fed would comply with any court decisions.
The Fed is limited in its ability to publicly aid Ms. Cook’s case, given that the allegations involve a personal matter as opposed to one directly related to her job as a governor.
Ms. Cook is being represented by Abbe Lowell, a longtime Washington litigator who has become the go-to lawyer for officials targeted by the Trump administration. One of his newest clients is Susan Monarez, the director of the Centers for Disease Control and Prevention, whom the Trump administration has sought to fire after she refused to resign.
In Thursday’s lawsuit, Mr. Lowell and his team described the Trump administration’s actions as “unprecedented and illegal” and characterized Ms. Cook’s attempted removal as part of an overtly political campaign to pressure the Fed to reduce borrowing costs.
Legal experts say that because the Fed is listed as a defendant in Ms. Cook’s lawsuit, it is limited in its ability to file a friend-of-the-court brief backing her position even if a ruling in her favor would hugely benefit the institution.
An Uncomfortable Spot
The position that Ms. Cook finds herself in is one that the Fed had long hoped to avoid. Mr. Powell, who has borne the brunt of the president’s attacks, has insisted that any attempt to fire him would be illegal.
Another top Fed official, Michael Barr, stepped down as vice chair for supervision in January in order to avoid the chance that he would be fired by Mr. Trump and any risks posed to the institution if he fought back.
Mr. Barr, who stayed on as a governor, said at the time that he and his lawyers believed that he would prevail in court if Mr. Trump tried to remove him. But he ultimately opted to avoid the very legal battle that Ms. Cook now finds herself in.
Ms. Boushey, the former Biden adviser, said she was not surprised that Ms. Cook chose to fight, given her pathbreaking history and her importance particularly to young Black women considering careers in economics.
“She’s done enough research to know that her actions matter,” she said. “How she behaves in this moment will matter for the Howard girls down the street that are majoring in economics, that see her as a role model. She has to stand up for what she thinks is right.”
Colby Smith covers the Federal Reserve and the U.S. economy for The Times.
Ben Casselman is the chief economics correspondent for The Times. He has reported on the economy for nearly 20 years.
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