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Fed Governor Lisa Cook is refusing to step down despite Donald Trump writing in a letter that she was “removed” from her post, “effective immediately.” The bizarre development has led to a constitutional dispute over the president’s powers and the autonomy of the Federal Reserve, which is traditionally viewed as a body that is immune to overt political influence.

The letter to Cook was posted on Truth Social after the president first called for her resignation on the platform five days ago. Trump wrote that he was authorized by the U.S. Constitution and the Federal Reserve Act of 1913 to remove Cook, who is one of the seven members of the Fed’s Board, “for cause.” According to the president, “cause” for removal exists “where there is sufficient reason to believe the member has made false statements on one or more mortgage agreements.”

“I have determined that faithfully enacting the law requires your immediate removal from office,” the letter reads.

The president’s decision to seek Cook’s removal is based on the allegation made by Bill Pulte, a Trump appointee to the agency that regulates Fannie Mae and Freddie Mac. Pulte accused the Fed Governor of fraudulently claiming that she had two primary residences, one in Ann Arbor and another in Atlanta, in 2021, to get a better mortgage. Pulte told Fox Business’s “Mornings with Maria” about the allegations.

“It’s very odd to see people try to twist back way sideways and upside down to justify mortgage fraud,” Pulte said. “This is a very serious crime. Mortgage fraud carries up to 30 years in prison. I believe the president has ample cause to fire Lisa Cook. Whether he wants to do that or not is entirely up to the president. However, we will go where mortgage fraud is. If mortgage fraud is with a Republican or a Democrat, it doesn’t matter—if you commit mortgage fraud in President Trump’s America, we’re going to come after you. And Lisa Cook is no exception to that.”

Pulte made a criminal referral to the Justice Department on August 15, in which he accused Cook of falsifying bank documents and property records. So far, Cook has not been charged.

Cook, who was appointed to the Federal Reserve Board by then-President Joe Biden in 2022, quickly responded to Trump’s letter, saying he did not have the authority to fire her from her position. “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. I will continue to carry out my duties to help the American economy as I have been doing since 2022,” Cook said in a statement shared with Fox News Digital.

Cook is represented by Abbe Lowell, who has represented Hunter Biden, New York Attorney General Letitia James, Jared Kushner, and Ivanka Trump. Lowell did not mince words in his response to Trump’s letter, saying, “President Trump has taken to social media to once again ‘fire by tweet,’ and once again his reflex to bully is flawed and his demands lack any proper process, basis, or legal authority. We will take whatever actions are needed to prevent his attempted illegal action.”

FOX Business reached out to the Federal Reserve for comment. The officials did not immediately respond.

Lowell later said that he would file a lawsuit on Cook’s behalf to formally challenge Trump’s removal.

“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.

Leading Democrats Have Come Out to Defend Cook, Calling Move an Abuse of Power

Leading Democrats have come out to defend Cook. House Minority Leader Hakeem Jeffries, D-N.Y., Sen. Elizabeth Warren, D-Mass., and Rep. Jamie Raskin, D-Md. All released statements in response to the controversy.

“I will have more to say on this later today,” Raskin said in a statement to Axios. “What an outrage and a scandal. This is the big one constitutionally.”

Warren said that the attempted removal was “an authoritarian power grab,” and “Trump is desperately looking for a scapegoat to cover for his own failure to lower costs for Americans, and firing Lisa Cook is his latest move.”

Jeffries also defended Cook in his statement, saying there was “not a shred of credible evidence that she has done anything wrong.” He also seemingly targeted Trump in his response. “To the extent anyone is unfit to serve in a position of responsibility because of deceitful and potentially criminal conduct, it is the current occupant of the White House. The American people are not buying your phony projection and slander of a distinguished public servant.”

Trump has been at loggerheads with Fed Chair Jerome Powell over interest rate policy in recent weeks. The president and his allies have called for the central bank to cut interest rates in a bid to boost the economy and lower the cost of servicing the national debt, which has surpassed $37 trillion.

The drama raises questions about the powers of the White House over the Federal Reserve. While the Federal Reserve Act allows the president to remove governors “for cause,” legal experts said it still required a lawful reason for such an action, something Cook and her legal team have suggested does not exist in her case.

With Cook refusing to resign, Lowell filing a lawsuit, and Democrats speaking out in her defense, the controversy now threatens to turn into a long legal and political saga that could have far-reaching implications for the independence of the Fed and the presidency.