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A federal judge on Tuesday ruled that Lisa Cook can remain on the Federal Reserve’s Board of Governors while her lawsuit challenging President Donald Trump’s attempt to remove her moves forward, delivering a major rebuke to the White House and a defense of the Fed’s independence.
U.S. District Judge Jia Cobb, appointed by former President Joe Biden, issued an injunction blocking Cook’s removal, finding that Trump had not provided a “legally permissible cause” as required under federal law.
“President Trump has not stated a legally permissible cause for Cook’s removal,” Cobb wrote, adding that the president’s justification relied only on allegations from years before Cook joined the Fed. “Such allegations are not a legally permissible cause.”
Allegations and Defense
Trump moved to fire Cook on Aug. 26, citing a letter from Bill Pulte, director of the Federal Housing Finance Agency and a Trump appointee, who alleged Cook made false statements on mortgage documents in Michigan and Georgia to obtain better loan terms. Cook has not been charged with any civil or criminal offense.
The president argued that such conduct raised questions about her trustworthiness in overseeing financial institutions. But Cook’s attorneys countered that the allegations were unsubstantiated, predated her Fed tenure, and had no bearing on her current role.
“None of the alleged misconduct occurred during the performance of Governor Cook’s duties as a Federal Board member,” her lawyers wrote in court filings, warning that Trump’s actions amounted to “unprecedented and illegal” political interference.
In her ruling, Judge Cobb agreed that Cook’s due process rights were violated, noting she had not been given notice or an opportunity to respond. She also emphasized the risk of irreparable harm, writing that the president’s approach “would mean that the President could, in practice, remove a member merely because he wanted his own appointees.”
Reaction and Implications
Cook’s attorney, Abbe David Lowell, said the decision reaffirms the Fed’s independence.
“This ruling recognizes and reaffirms the importance of safeguarding the independence of the Federal Reserve from illegal political interference,” Lowell said. “Governor Cook will continue to carry out her sworn duties as a Senate-confirmed Board Governor.”
The White House pushed back immediately. Spokesman Kush Desai said the ruling “will not be the last say on the matter,” adding that Trump “lawfully removed Lisa Cook for cause due to credible allegations of mortgage fraud.”
Under the Federal Reserve Act, board members serve 14-year terms and can only be removed by the president “for cause.” Cook, who joined in 2022 to fill an unexpired term, is now confirmed through 2038.
A Clash Over Fed Independence
The dispute underscores Trump’s escalating conflict with the Federal Reserve and Chair Jerome Powell, whom he has repeatedly attacked over interest rate policy. Cook, Powell and 10 other Fed officials sit on the committee that sets the nation’s monetary policy — a process traditionally insulated from partisan politics.
Cook’s lawsuit argues Trump’s move represents the first attempted removal of a Fed governor in the central bank’s 112-year history. Her lawyers warned that if Trump’s definition of “cause” stands, it would allow presidents to fire board members over policy disagreements, “eroding the central bank’s independence and threatening its mission of providing economic stability.”
Judge Cobb appeared to agree, writing that Trump’s argument “leads to an absurd result” that would provide “no practical insulation for the members of the Board of Governors.”
The ruling sets up what is expected to be a lengthy legal battle. Appeals are likely, but for now, Lisa Cook remains on the Fed board, carrying out her duties as the central bank weighs its next steps on interest rates amid persistent inflation concerns.
