Washington — President Trump said Monday he has fired Lisa Cook from the Federal Reserve's Board of Governors, a dramatic move after months of public attacks against the central bank.

Cook and her attorney said Tuesday that the move has no legal basis and that they plan to file a lawsuit challenging the president's action.

The president announced Cook's removal from the Fed board in a letter posted to Truth Social that accused Cook of making false statements on mortgage documents, actions he claimed were "gross negligence" and "potentially criminal." Mr. Trump had previously urged Cook to resign, leading the economist to say she had "no intention of being bullied to step down from my position because of some questions raised in a tweet."

The move is an early test of Mr. Trump's power to terminate members of the Federal Reserve. Under federal law, Fed board members serve for 14-year terms and can only be fired by the president "for cause." Cook has served on the Fed since being appointed to complete another member's unexpired term in 2022, and her current term would run until 2038

Mr. Trump wrote in a letter to Cook: "I have determined that there is sufficient cause to remove you from your position."

Cook still has access to her office at the Federal Reserve in Washington, a source familiar with the situation told CBS News on Tuesday. The central bank has deferred making any decisions about her status until a court decision is issued, which means nothing has changed in the Fed's view regarding how Cook is able to carry out her duties, according to the source.

The source noted there is no official business before the Fed board this week, and pointed to the end of August being quiet. The source declined to discuss Cook's participation in a mid-September meeting of the Fed's interest rate-setting committee.

In a statement, Cook said that Mr. 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. I will continue to carry out my duties to help the American economy as I have been doing since 2022."

Her attorney Abbe Lowell said Cook will challenge her firing in court. 

"President Trump has no authority to remove Federal Reserve Governor Lisa Cook. His attempt to fire her, based solely on a referral letter, lacks any factual or legal basis. We will be filing a lawsuit challenging this illegal action," Lowell said.

A Federal Reserve spokesperson said in a statement the Fed will "continue to carry out its duties as established by law." The central bank also noted Cook's plan to sue over her firing, and said it "will abide by any court decision."

"Congress, through the Federal Reserve Act, directs that governors serve in long, fixed terms and may be removed by the president only 'for cause.' 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," the statement read.

What are Trump's allegations against Lisa Cook?

The allegations against Cook were leveled earlier this month by Federal Housing Finance Agency Director Bill Pulte, who has positioned himself as an ally of Mr. Trump's campaign against the Fed. Pulte sent a letter to Attorney General Pam Bondi accusing Cook of taking out mortgages for homes in Michigan and Georgia in 2021, and telling banks in both cases that she planned to use the homes as her primary residences. Pulte alleged that was a fraudulent attempt to gain more favorable lending terms.

Last week, Mr. Trump posted on Truth Social: "Cook must resign, now!!!"

Cook said in a statement released through the Fed: "I do intend to take any questions about my financial history seriously as a member of the Federal Reserve and so I am gathering the accurate information to answer any legitimate questions and provide the facts."

Pulte has also made mortgage fraud allegations against California Sen. Adam Schiff and New York Attorney General Letitia James, two Democratic officials and Trump foes who denied the accusations. Notably, James's office sued Mr. Trump and his company for loan fraud before his return to the White House, securing an almost $400 million civil court judgment that was tossed out by a New York state appellate court last week.

Can Trump fire Cook?

The law establishing the Federal Reserve System, known as the Federal Reserve Act, specifies that the president can only remove a member of its Board of Governors "for cause." Courts have said little about what may constitute "cause," though it is generally thought to be malfeasance. Congress has in other federal laws restricted the president's power to remove officers at independent agencies to inefficiency, neglect of duty or malfeasance in office.

In Cook's case, the allegations made by Pulte boil down to possible mortgage fraud, specifically that she took out two different mortgages within weeks of each other, stating both properties would serve as her primary residence. To prove fraud, the Justice Department would have to prove intent to misrepresent her financial situation to the lending institutions involved. That would have come in the criminal referral investigation made last week.

The Supreme Court has in a series of recent rulings reasserted the president's power to remove executive branch officers at-will. In 2020, the high court ruled that the structure of the Consumer Financial Protection Bureau — headed by a single leader removable only for inefficiency, neglect or malfeasance — was unconstitutional.

Then, in a 2021 decision striking down the structure of the Federal Housing Finance Authority, the high court acknowledged that a "for cause" restriction in the 2008 Recovery Act "appears to give the president more removal authority than other removal provisions," like those restricting removals to instances of inefficiency, neglect of duty, or malfeasance in office. Still, it said that "the Constitution prohibits even 'modest restrictions' on the President's power to remove the head of an agency with a single top officer."

Lately, the Supreme Court has allowed Mr. Trump to remove members of multi-member agencies — the National Labor Relations Board, Merit Systems Protection Board and the Consumer Product Safety Commission — without cause through decisions on its emergency docket.

But the high court suggested in one of those emergency rulings that the Fed is different from other independent agencies. In an unsigned opinion, the court said the central bank is "a uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States."

Why is Trump angry at the Fed?

Cook's firing came after Mr. Trump spent months attacking the Federal Reserve and its chair, Jerome Powell, over the central bank's handling of interest rates.

Cook, Powell and 10 other Fed officials sit on a committee that controls the nation's monetary policy and sets target interest rates, with a dual mandate of keeping inflation low and employment levels high. This work is typically done independently, with little to no input from political leaders.

The Fed hiked interest rates to decades-long highs in 2022 and 2023 in a bid to quell inflation. After some cuts last year, the central bank has chosen to leave rates at relatively high levels so far this year, fearing that inflation could come roaring back or that Mr. Trump's tariff strategy could cause consumer prices to jump. The trade-off is that higher interest rates can lead to slower economic growth, and they make it more expensive for American consumers and businesses to borrow.

Mr. Trump has lashed out over this strategy, nicknaming Powell "Too Late." The president has floated the idea of firing Powell, in some cases accusing him of mismanaging a project to renovate the Fed's headquarters. 

Powell hinted last week that interest rate cuts could be on the horizon, as the Fed tries to prevent inflation from spiking without triggering higher unemployment. During a speech in Jackson Hole, he said the Fed will "proceed carefully," but recent shifts "may warrant adjusting our policy stance."

Even without firings, the president could reshape the Fed board as positions open up. If the Senate confirms Mr. Trump's replacements for Cook and another Biden nominee who stepped down early, five of the Fed's seven governors will be Trump appointees — making up most of the Fed's board of governors and more than one-third of the 12-member interest rate-setting Federal Open Market Committee.

Currently, three Fed board members are Trump picks, both from his first term: Powell, vice chair for supervision Michelle Bowman and board member Christopher Waller.

Mr. Trump is widely expected not to appoint Powell to another four-year term as Fed chair when his current one ends in May 2026, though he hasn't announced a successor yet. Meanwhile, Mr. Trump has nominated his economic adviser Stephen Miran to serve on the Fed board until January 2026, replacing Adriana Kugler, the Biden appointee who left the board earlier this month. It's unclear who he will pick to replace Cook.

Cook was confirmed in 2022 by the Senate when then-Vice President Kamala Harris broke the 50-50 party line tie, making Cook the first Black woman to serve on the Federal Reserve Board of Governors. She started her term in May 2022 and it runs 14 years.

She has voted in sync with Powell to hold interest rates steady so far this year.

Reaction to Mr. Trump's move so far has been along party lines. For instance, in a post on X, Republican Sen. Rick Scott of Florida said it was "doing the right thing to hold people accountable" while Democratic Sen. Elizabeth Warren of Massachusetts issued a statement saying this represented an "authoritarian power grab that blatantly violates the Federal Reserve Act."

Editor's note: This story has been updated to reflect Mr. Trump picked three members of the current Fed board: Jerome Powell, Christopher Waller and Michelle Bowman. 

Kelly O'Grady contributed to this report.