Judge Blocks Trump From Firing Fed Governor Lisa Cook

 

A federal judge has temporarily prevented President Donald Trump from removing Federal Reserve governor Lisa Cook, handing an important win to the central bank in its fight to preserve independence from political interference. The case marks the first time a U.S. president has attempted to fire a Fed governor, highlighting a historic clash between the White House and the central bank.

Judge Jia Cobb ruled that Trump had not provided evidence that Cook was acting against the public interest or failing in her duties. She noted that the law establishing the Federal Reserve allows governors to be removed only “for cause,” but does not define the standard. In her view, that provision should apply strictly to misconduct while in office, not to conduct from earlier in a governor’s life.

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The decision follows Trump’s announcement last month that he had dismissed Cook, which the Fed disputed by stating she remained in her post. Cook subsequently sued Trump, arguing the firing attempt was unlawful. Her lawyer, Abbe David Lowell, praised the ruling as a reaffirmation of the Fed’s independence. The outcome may set a precedent as the legal battle is expected to advance toward the Supreme Court.

The dispute centers on Trump’s claim that Lisa Cook misrepresented details about three properties on mortgage applications, potentially lowering her borrowing costs and securing tax benefits. Trump and Federal Housing and Finance Authority director William Pulte cited these allegations as justification for her removal. Cook has denied wrongdoing and argued that such claims cannot form the legal basis for firing a Senate-confirmed Fed governor.

Judge Cobb’s ruling emphasized that the “for cause” clause in the Federal Reserve Act should be interpreted narrowly, applying only to a governor’s behavior and performance while serving on the board. She made clear that allegations tied to events before Cook’s appointment cannot justify dismissal. This interpretation reinforces the principle that the Fed must be insulated from political pressure in order to make independent monetary policy decisions.

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The ruling comes as Trump continues to clash with the Fed, frequently criticizing chair Jerome Powell for holding off on interest rate cuts even as central banks in Europe and the UK have eased borrowing costs. The Fed is preparing for a key meeting next week, where it is expected to announce its first rate cut since September 2024. The broader case could have sweeping implications for U.S. monetary policy.