Federal Reserve Governor Lisa Cook said Monday she will not step down from her position following an unprecedented attempt to remove her from the central bank’s board, according to the Washington Post (WP). The move, which cites disputed mortgage fraud allegations, could trigger a court battle that reaches the Supreme Court. 

Cook, the first Black woman to serve as a Fed governor, responded firmly in a statement, saying that the current federal government “purported to fire me ‘for cause’ when no cause exists under the law, and “has no authority to do so.” She added, “I will continue to carry out my duties to help the American economy as I have been doing since 2022.”

Cook, who was appointed in 2022, has retained high-profile attorney Abbe Lowell. He criticized the attempted dismissal, saying that the federal government’s “demands lack any proper process, basis or legal authority. We will take whatever actions are needed to prevent his attempted illegal action.” 

Legal experts note that under the Federal Reserve Act of 1913, governors can only be removed “for cause.” Historically, that has been interpreted to mean serious misconduct or dereliction of duty. While the letter tied to the removal cites allegations of false statements on mortgage applications, Cook has not been charged with any crime.

The attempted dismissal quickly drew political reaction. Sen. Elizabeth Warren (D-Mass.) called it “an authoritarian power grab that blatantly violates the Federal Reserve Act and must be overturned in court.”

If the removal is upheld, the balance of the Federal Reserve Board could shift, giving the current administration the ability to nominate another member and secure a majority of appointees. Fed Board governors serve staggered 14-year terms, making any changes to the board highly consequential for the future of U.S. monetary policy.

Financial market analysts said the markets showed an immediate reaction following the announcement, with the U.S. dollar index dipping.