A federal judge on Tuesday barred President Donald Trump from removing Federal Reserve Governor Lisa Cook, delivering a sharp rebuke to the White House and setting the stage for a high-stakes showdown over the central bank's independence.
U.S. District Judge Jia Cobb granted Cook a preliminary injunction, writing that "the public interest in Federal Reserve independence weighs in favor of Cook's reinstatement." Cobb ruled that the Federal Reserve Act's "for cause" provision limits removals to misconduct "related to their behavior in office" and does not allow termination based on events that predated service.
Trump announced on Aug. 25 that he was firing Cook, citing allegations of mortgage fraud tied to documents she signed years before joining the Fed. Cook, the first Black woman to serve as a Fed governor, has denied wrongdoing. Her attorney, Abbe Lowell, said Tuesday that the ruling "reaffirms the importance of safeguarding the independence of the Federal Reserve from illegal political interference."
The decision ensures that Cook will participate in the Fed's policy meeting beginning Sept. 16, where officials are expected to cut interest rates in response to weakening job growth. The injunction also prevents Chair Jerome Powell and other board members from enforcing Trump's order while the case proceeds.
The legal battle now heads toward the Supreme Court, which has sided with Trump in past disputes over his power to remove leaders of independent agencies. But the justices have also signaled that the Fed may warrant greater insulation because of its quasi-private structure and outsized role in managing monetary policy.
White House spokesman Kush Desai defended Trump's decision, saying the president acted lawfully. "The President determined there was cause to remove a governor who was credibly accused of lying in financial documents from a highly sensitive position overseeing financial institutions," Desai said. "The removal of a governor for cause improves the Federal Reserve Board's accountability and credibility."
Trump's attempt to fire Cook follows months of frustration with Powell and other Fed officials for resisting his calls to slash rates. He considered firing Powell earlier this year and has pushed nominees who share his view that lower borrowing costs are needed to spur growth. If Cook is ultimately removed, Trump would gain another appointment to the seven-member board, strengthening his influence over interest-rate policy and financial regulation.
The Senate Banking Committee is set to vote this week on Trump's nomination of Stephen Miran, chair of the Council of Economic Advisers, to replace former governor Adriana Kugler, who resigned unexpectedly in August. If both Miran and a Cook replacement are confirmed, Trump's appointees would hold a majority on the Fed board for the first time.
Judge Cobb rejected the Justice Department's argument that courts lack authority to review presidential removals of Fed governors, writing: "Such a rule would provide no practical insulation for the members of the Board of Governors." She also criticized the administration for airing allegations on social media rather than issuing a formal notice, saying Cook's due-process rights were "likely violated."
