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A panel of federal appeals court judges on Monday blocked President Donald Trump from removing Federal Reserve Governor Lisa Cook, hours before she and other top central bank officials were set to begin a closely watched meeting on interest rates.
The ruling, issued by two of the three judges on the panel, said the Trump administration had “not satisfied the stringent requirements for a stay pending appeal,” leaving Cook in her role as the Federal Reserve Board prepares to debate whether to cut interest rates this week.
A district court judge in Washington had already halted Cook’s removal on Sept. 9, but the administration appealed the decision and urged the court to act before the Federal Open Market Committee’s meeting, which begins Tuesday and concludes Wednesday. Trump is now expected to appeal to the Supreme Court.
The legal clash stems from Trump’s unprecedented effort to fire Cook in late August, citing allegations of mortgage fraud first raised by Federal Housing Finance Agency Director Bill Pulte, one of the president’s political appointees. Cook has not been charged with any crime and has strongly denied the accusations.
“Governor Cook did not ever commit mortgage fraud,” her attorneys wrote in a recent court filing. NBC News reviewed documents about the property at issue, which show Cook listed it as a “vacation home” or “2nd home” rather than a primary residence, undermining Pulte’s claims.
In their ruling, the appeals judges emphasized that Cook “may not be removed prior to being provided ‘some kind’ of meaningful notice and opportunity to respond.” They also underscored the unique role of the Federal Reserve, noting that it differs significantly from other agencies where the president has attempted to remove officials.
The Supreme Court has previously described the central bank as a “uniquely structured, quasi-private entity” with a distinct historical tradition of independence. Under the Federal Reserve Act, governors may only be removed “for cause,” typically defined as misconduct or inability to fulfill their duties.
The White House has maintained that Trump acted lawfully. “President Trump lawfully removed Lisa Cook for cause,” administration officials said in a statement.
Still, Cook’s lawyers and many economists warn the attempt could destabilize financial markets.
“An independent central bank acts predictably and transparently, which stabilizes markets and the wider economy,” her attorneys argued in an Aug. 28 filing. “President Trump’s unprecedented action threatens the historic independence of the Federal Reserve.”
JPMorgan’s chief U.S. economist echoed those concerns, writing that if Trump succeeded in removing Cook, “the outcome would be momentous,” potentially undermining confidence in the world’s most influential central bank.
Trump is the first president in U.S. history to attempt firing a sitting Federal Reserve governor — a move that could reshape the balance of power between the White House and the central bank at a critical moment for the U.S. economy.
