Axed US Fed Governor Lisa Cook sues Donald Trump over his attempt to sack her
Federal Reserve Governor Lisa Cook is taking Donald Trump to court over his recent attempt to fire her.
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The move, which could have wide-ranging implications for the US central bank's autonomy, comes after Mr Trump made the unprecedented decision to axe her on Tuesday.
The President claimed there was "sufficient reason" to believe Ms Cook had made false statements on her mortgage, while she called the move “unlawful and void."
In her lawsuit, Ms Cook said "no cause exists under the law" to fire her.
Ms Cook plays a key role in setting interest rates in the US and has been at odds with Trump, who has constantly called for rates to be cut.
"This case challenges President Trump's unprecedented and illegal attempt to remove Governor Cook from her position which, if allowed to occur, would be the first of its kind in the Board's history," Abbe Lowell, Ms Cook's attorney, wrote in the lawsuit.
"It would subvert the Federal Reserve Act ... which explicitly requires a showing of 'cause' for a Governor's removal, which an unsubstantiated allegation about private mortgage applications submitted by Governor Cook prior to her Senate confirmation is not," Lowell added.
Cook said on Monday night that she would not step down.
"President Trump purported to fire me 'for cause' when no cause exists under the law, and he has no authority to do so," she said in an emailed statement. "I will not resign."
Bill Pulte, a Trump appointee to the agency that regulates mortgage giants Fannie Mae and Freddie Mac, made the accusations last week.
He alleged that Ms Cook had claimed two primary residences - in Ann Arbor, Michigan, and Atlanta - in 2021 to get better mortgage terms. Mortgage rates are often higher on second homes or those purchased to rent.
Mr Trump's move is likely to touch off an extensive legal battle that will probably go to the Supreme Court and could disrupt financial markets. Stock futures declined slightly late on Monday, as did the dollar against other major currencies.
If Mr Trump succeeds in removing Ms Cook from the board, it could erode the Fed's political independence, which is considered critical to its ability to fight inflation because it enables it to take unpopular steps like raising interest rates.