US Federal Reserve Director Lisa Cook has said she will not stand down after President Donald Trump said he would fire her.
Trump’s threat has set up a potential standoff between the US central bank and the president, who has put increasing pressure on the Federal Reserve over what he sees as an unwillingness to lower interest rates.
Trump is alleging Cook committed mortgage fraud. Last week, the Federal Housing Finance Agency Bill Pulte raised the allegations that Cook claimed two primary residences in 2021, one in Michigan and the other in Atlanta.
Cook denied the allegations and said Trump held no authority to fire her.
In a statement, Cook said: “President Trump purported to fire me ‘for cause’ when no cause exists under the law, and he has no authority to do so.”
“I will not resign.”
Cook was appointed to the Federal Reserve board in 2022 by the former president Joe Biden, and she is the first black woman to serve as a governor.
Her attorney, Abbe Lowell said in a statement that Trump has no legal authority to remove Cook and that his “reflex to bully is flawed” as “his demands lack any proper process”.
“We will take whatever actions are needed to prevent his attempted illegal action,” Lowell said.
Trump said there was “sufficient reason” to believe Cook had made false statements on her mortgage and cited constitutional powers he said allowed him to remove her.
Federal governors serve 14-year terms, and the law does not allow a president to fire one without “cause”, or a type of wrongdoing. This would be the first time in history that a president has sought to fire a federal governor.
“Congress, through the Federal Reserve Act, directs that governors serve in long, fixed terms and may be removed by the president only ‘for cause’,” the Federal Reserve said in a statement on the situation.
“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.”
On Tuesday, Trump said he had several “good people” in mind to replace Cook.
As Cook plans a lawsuit against Trump, the central bank has said it would abide by a court decision.