A federal judge has temporarily blocked President Donald Trump’s attempt to remove Lisa Cook from her position as a governor of the Federal Reserve Board, allowing her to remain in office while she challenges the firing in court.
U.S. District Judge Jia Cobb, appointed by President Joe Biden, ruled on Tuesday that Trump’s stated reasons do not constitute a legally permissible cause for Cook’s removal under the Federal Reserve Act, which restricts the president’s authority to fire Fed governors to specific misconduct in office. Cobb issued a preliminary injunction that keeps Cook in her role during the ongoing litigation, emphasizing the importance of safeguarding the Fed’s independence from political interference.
President Trump fired Cook on August 25, citing allegations of false representations on mortgage agreements from several years ago that reportedly resulted in more favorable loan terms. However, the judge noted that these allegations concern conduct that predates Cook’s service on the Fed Board, and such conduct does not meet the law’s criteria for cause to remove a governor.
Judge Cobb’s ruling pointed out that firing Cook without establishing proper cause violates her due process rights and that Cook would suffer irreparable harm if removed before the case is resolved. “President Trump has not stated a legally permissible cause for Cook’s removal,” Cobb wrote. The judge also highlighted that the independence of the Federal Reserve is critical to promoting stability in the nation’s banking system and monetary policy.
The decision comes just one week before a key Federal Reserve policy meeting scheduled for September 16, where the board is expected to decide on interest rate changes. Until now, uncertainty surrounded whether Cook would be able to participate and vote. With the injunction, Cook remains an active member of the board.
Abbe David Lowell, Cook’s attorney, praised the ruling, stating it reaffirms the importance of protecting the Federal Reserve from unlawful political interference. “Allowing the President to unlawfully remove Governor Cook on unsubstantiated and vague allegations would endanger the stability of our financial system and undermine the rule of law,” Lowell said.
The Trump administration signaled its intent to appeal the ruling immediately. The case is likely to ascend through the courts and could reach the Supreme Court, especially in light of a Justice Department criminal investigation into Cook concerning the mortgage allegations.
As this legal battle unfolds, the Federal Reserve has stated it will abide by any court decision. The challenge over the limits of presidential power to remove Fed governors underscores broader debates about the independence of the nation’s central bank and the balance between executive authority and financial oversight.