Court Blocks Trump’s Bid to Fire Fed Governor Lisa Cook/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ A federal court ruled that Federal Reserve Governor Lisa Cook can remain in her position while fighting President Donald Trump’s attempt to fire her over alleged mortgage fraud. Judge Jia Cobb said the charges do not constitute legal grounds for dismissal and that Cook is likely to prevail in her lawsuit. The ruling reinforces the Fed’s independence and ensures Cook participates in the September policy meeting.
Lisa Cook Court Ruling — Quick Looks
- Court grants Lisa Cook an injunction blocking Trump’s firing attempt
- Judge rules Fed governors may only be removed “for cause” during office tenure
- Cook accused of mortgage fraud on properties in Michigan and Georgia
- White House says Trump “lawfully removed” Cook over credible allegations
- Cook’s lawyer calls the firing “unsubstantiated and unlawful”
- Fed Board and Chair Jerome Powell ordered to allow Cook to serve
- Cook will join Fed’s Sept. 16–17 meeting on interest rates
- If Trump succeeds, he could secure a 4-3 Fed majority
- Case marks first time a president has sought to oust a Fed governor
- Economists warn Fed independence at risk if firing is upheld
Deep Look: Court Rules Lisa Cook Can Remain as Fed Governor Despite Trump’s Firing Attempt
WASHINGTON — A federal judge delivered a major blow to the Trump administration on Tuesday, ruling that Federal Reserve Governor Lisa Cook may remain in her position while challenging President Donald Trump’s unprecedented attempt to remove her from the central bank’s board.
The decision, which grants Cook a preliminary injunction, underscores the legal protections shielding the Federal Reserve’s independence from political influence — and ensures Cook will participate in the Fed’s critical September 16–17 meeting, when policymakers are expected to cut interest rates again.
Trump’s Allegations Against Cook
Trump announced Cook’s removal on August 25, citing allegations she committed mortgage fraud in 2021, before joining the Fed. According to Trump’s appointees, Cook misrepresented two properties — one in Ann Arbor, Michigan, and another in Atlanta, Georgia — as primary residences, potentially lowering her mortgage costs.
The White House defended the firing, with spokesman Kush Desai declaring:
“President Trump lawfully removed Lisa Cook for cause due to credible allegations of mortgage fraud from her highly sensitive position overseeing financial institutions.”
But Cook denies wrongdoing, and her lawsuit argues she was denied due process and removed without a fair hearing.
Judge Rules Against Trump
U.S. District Judge Jia Cobb, an appointee of President Joe Biden, sided with Cook, ruling that Trump’s case lacked legal grounds.
Under the law, Federal Reserve governors can only be dismissed “for cause,” which Cobb said applies only to conduct during their time in office. Allegations from before Cook joined the board, therefore, do not qualify.
“President Trump has not stated a legally permissible cause for Cook’s removal,” Cobb wrote.
The court also ordered Fed Chair Jerome Powell and the rest of the Board of Governors to allow Cook to continue in her role while litigation proceeds.
Legal and Economic Implications
This marks the first time in history that a U.S. president has attempted to fire a Federal Reserve governor. Economists warn the precedent could undermine confidence in the central bank’s independence.
The Fed, created in 1913, is designed to operate free of direct White House control, with governors serving long, staggered terms to prevent political dominance.
Abbe Lowell, Cook’s attorney, hailed the ruling:
“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.”
Cook, the first Black woman to serve as a Fed governor, has built a distinguished academic career, teaching at Michigan State University and Harvard Kennedy School, and studying at Oxford and Spelman College.
Trump’s Push for Lower Rates
Trump has made no secret of his frustration with the Fed. He has repeatedly pressured Powell and other governors to slash interest rates far below current levels, arguing for rates as low as 1.3%. The Fed’s key short-term rate currently stands at 4.3%.
Fed officials — and most economists — warn that cutting rates too deeply could fuel inflation and drive up long-term borrowing costs, including mortgage and car loan rates.
If Trump succeeds in removing Cook, he could tilt the board’s balance. With one vacancy already and a pending nomination of his economic adviser Stephen Miran, Trump could achieve a 4-3 majority on the Fed’s seven-member board.
Broader Stakes for Fed Independence
The ruling is being watched closely by investors, lawmakers, and central bankers worldwide. If Cook ultimately loses her case and Trump replaces her, it could open the door for presidents to remove Fed governors for political reasons — a move economists say would damage U.S. financial credibility.
“Litigation over this case could define the limits of presidential power over the Federal Reserve,” said one policy analyst.
Congress originally designed the Fed to insulate monetary policy from politics so it could raise rates during inflationary periods even when politically unpopular.
By challenging that principle, Trump risks altering how financial markets perceive the U.S. dollar, Treasury debt, and broader economic stability.
What Comes Next
The administration is expected to appeal Cobb’s ruling, which could eventually reach the Supreme Court. Meanwhile, Cook will remain an active voting member of the Fed’s policymaking committee, just as the central bank prepares to make another rate cut.
The battle may also shape future Fed leadership, especially as Trump continues nominating candidates who pledge loyalty to his low-interest-rate agenda.
For now, the ruling affirms that Lisa Cook will continue serving on the Fed Board — and that the 112-year tradition of central bank independence still holds, at least temporarily.
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