A federal judge temporarily halted President Donald Trump’s bid to fire Federal Reserve governor Lisa Cook, allowing her to remain on the job while her legal challenge against the president’s effort to remove her over allegations of mortgage fraud moves forward.
The ruling means Lisa Cook will likely be able to attend a key Fed meeting next week.
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Key Facts
In her Tuesday night ruling, D.C. federal judge Jia Cobb said: “The Court finds that Cook has made a strong showing that her purported removal was done in violation of the Federal Reserve Act’s ‘for cause’ provision.”
The judge granted a preliminary injunction requiring the Federal Reserve to allow Cook to continue serving on its board of governors for now.
Cobb’s ruling noted that the “best reading” of the provision that allows a president to remove a central bank governor “for cause” is “limited to grounds concerning a Governor’s behavior in office” and how they are executing their duty.
Additionally, the judge noted that Trump’s firing of Cook violated her “procedural rights under the Fifth Amendment’s Due Process Clause,” and she demonstrated she could face “irreparable harm from her removal.”
The Trump administration has not yet commented on the ruling, but it is likely to file an appeal.
What Else Did The Judge Say In The Ruling?
In the ruling, Cobb noted: “Cook is one of seven members of a Board that is, by design, not intended to be susceptible to policy pressure, let alone tasked with implementing the President’s agenda…President Trump has not identified anything related to Cook’s conduct or job performance as a Board member that would indicate that she is harming the Board or the public interest by executing her duties unfaithfully or ineffectively.”
What To Watch For
The preliminary injunction comes just one week before a highly anticipated Federal Reserve policy meeting next week on September 16 and 17, where it is expected to vote on lowering interest rates. Tuesday night’s ruling means Cook will likely be able to attend the meeting. While the central bank has not commented on the latest ruling, a spokesperson told various news outlets last month that they had been made aware of Cook’s plan to “promptly challenge” her removal. The spokesperson added: “The Federal Reserve will abide by any court decision.”
Crucial Quote
In a statement shared with multiple outlets, Cook’s lawyer Abbe Lowell said: “This ruling recognizes and reaffirms the importance of safeguarding the independence of the Federal Reserve from illegal 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. Governor Cook will continue to carry out her sworn duties as a Senate-confirmed Board Governor.”
Key Background
Trump announced he was moving to fire Cook in a Truth Social post late last month. The post included a White House letter sent to Cook, informing her, “You are hereby removed from your position on the Board of Governors of the Federal Reserve, effective immediately.” In the letter, Trump argued the Federal Reserve Act allows him to remove governors at his discretion “for cause” and adds that he has “determined that there is sufficient cause to remove you from your position.” The president cited allegations made by Federal Housing Finance Agency Director Bill Pulte that Cook had committed mortgage fraud by claiming two properties as her primary residence. In response, Cook questioned the legality of Trump’s action and 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. I will continue to carry out my duties to help the American economy as I have been doing since 2022.”
Further Reading
Fed Governor Lisa Cook Sues Trump Over Firing (Forbes)
Trump Says He Is Firing Fed Governor Lisa Cook—She Says President Lacks Authority To Do So (Forbes)
Trump’s Firing Of Lisa Cook Puts 90-Year-Old Supreme Court Precedent At Risk—Here’s Why That Matters (Forbes)