A U.S. federal judge has issued a temporary injunction preventing President Donald Trump from removing Federal Reserve Governor Lisa Cook from her position, delivering an initial blow to the White House’s efforts to reshape the central bank’s leadership.
The ruling, handed down by District Judge Jia Cobb in Washington, underscores the ongoing tension between presidential authority and the Fed’s statutory independence, a cornerstone of U.S. monetary policy designed to shield interest-rate decisions from political pressures.
The decision comes after Trump announced in late August that he had fired Cook, citing allegations of mortgage fraud related to properties she owned in Georgia and Michigan before joining the Fed board.
According to claims from Trump and Federal Housing Finance Agency Director William Pulte, Cook allegedly misrepresented details on mortgage applications to secure lower interest rates and tax benefits—accusations she has vehemently denied.
Despite the president’s declaration, the Federal Reserve maintained that Cook remained in her role, prompting her to file a lawsuit on August 28 seeking to void the firing as unlawful.
In her 25-page preliminary ruling, Judge Cobb emphasized that the Federal Reserve Act allows governors to be removed only “for cause,” a term she interpreted as limited to misconduct during their tenure, not pre-office actions.
“The best reading of the ‘for cause’ provision is that the bases for removal of a member of the Board of Governors are limited to grounds concerning a Governor’s behavior in office and whether they have been faithfully and effectively executing their statutory duties,” Cobb wrote.
She added that allowing removals based on prior conduct could undermine the Fed’s autonomy, potentially subjecting it to undue political influence.
The judge also noted that Cook had demonstrated a likelihood of success on her claims, including violations of due process, and that her ouster would cause “irreparable harm” to both her and the public interest in central bank stability.
Cook’s legal team, led by attorney Abbe David Lowell, hailed the decision as a vital affirmation of the Fed’s independence.
“This ruling recognizes and reaffirms the importance of safeguarding the independence of the Federal Reserve from illegal political interference,” Lowell stated. “Governor Cook will continue to carry out her sworn duties as a Senate-confirmed Board Governor.”
The injunction ensures Cook can participate in the Fed’s upcoming policy meeting on September 16-17, where officials are widely expected to announce the first interest rate cut since September 2024—a move Trump has publicly pressured the bank to accelerate to stimulate economic growth.
This case marks the first instance of a president attempting to fire a Fed governor, testing uncharted legal waters. Established in 1913, the Federal Reserve’s structure includes a seven-member board of governors, appointed by the president and confirmed by the Senate for 14-year terms, with protections against arbitrary dismissal to maintain impartiality in setting borrowing costs.
Trump, who has frequently criticized Fed Chair Jerome Powell and the board for not aligning with his economic agenda, nominated Cook in 2022; she was confirmed as the first Black woman to serve on the board.
The allegations against her surfaced amid broader scrutiny of her qualifications and past academic work, fueled by conservative critics.
The White House and Justice Department argued that “for cause” should be broadly defined at the president’s discretion, including any inefficiency, neglect, or malfeasance, even if predating her appointment. However, Cobb rejected this as overly expansive, describing the government’s position as “circular” during earlier hearings.
The ruling does not resolve the underlying merits of the fraud claims or the full scope of presidential removal powers, which are expected to be litigated further, potentially escalating to the U.S. Supreme Court.
Reactions to the decision have been swift and polarized. On social media platform X, users and analysts debated the implications for Fed autonomy.
One post highlighted the ruling as a “big win for central bank independence,” while others criticized it as “bureaucratic nonsense” obstructing accountability.
Financial markets showed muted response, with investors focusing more on upcoming inflation data and rate decisions, but the case could signal broader challenges for Trump’s second-term agenda, including potential overhauls of financial regulations.
Experts warn that a final outcome favoring Trump could erode confidence in the Fed’s nonpartisan role, especially as the bank navigates post-pandemic recovery and geopolitical uncertainties.
“The public interest in Federal Reserve independence weighs in favor of Cook’s reinstatement,” Cobb concluded, echoing sentiments from prior cases like those involving the Consumer Financial Protection Bureau.
Neither the White House nor the Federal Reserve provided immediate comments on the ruling. As the legal battle unfolds, it could set precedents for executive-branch interactions with independent agencies, influencing everything from monetary policy to regulatory enforcement in the years ahead.