Court rules Lisa Cook can remain a Fed governor for now while fighting Trump’s attempt to fire her

Lead

U.S. District Judge Jia Cobb on Tuesday granted Federal Reserve Governor Lisa Cook a preliminary injunction that prevents President Donald Trump from removing her while she challenges his firing in court. The decision, which the administration is expected to appeal, finds Cook is likely to succeed on legal claims that the White House lacked lawful cause to remove her. The ruling preserves Cook’s role on the Fed board through the litigation and allows her to take part in the central bank’s Sept. 16–17 policy meeting. The outcome is an immediate check on the administration’s attempt to exert direct control over the Fed.

Key Takeaways

• Judge Jia Cobb granted a preliminary injunction on Tuesday, blocking the administration’s Aug. 25 removal of Lisa Cook while the case proceeds.
• The court concluded Cook is likely to prevail on her claim that the firing did not meet the statutory “for cause” standard for Fed governors.
• Cook will be allowed to participate in the Federal Reserve’s Sept. 16–17 meeting, when officials are widely expected to cut the policy rate by 25 basis points.
• The allegations prompting the firing concern mortgage disclosures tied to two properties Cook purchased in 2021; those claims remain disputed in court.
• The ruling instructs Fed Chair Jerome Powell and the Board of Governors to permit Cook to operate as a board member during the litigation.
• Legal scholars say no president has attempted to remove a Fed governor before; the case could set a precedent for central-bank independence.
• If Cook were removed and replaced, President Trump could move toward a 4–3 majority on the Fed board, affecting future policy choices.

Background

The Federal Reserve is structured to be insulated from day-to-day politics: governors serve long, staggered terms and can be removed by a president only for cause. That statutory protection reflects a congressional judgment that an independent central bank can make economically painful but necessary decisions—such as raising rates to fight inflation—without immediate political pressure. President Trump announced on Aug. 25 that he was firing Cook following allegations from a Trump appointee that she had misrepresented two 2021 home purchases as primary residences, which could affect mortgage terms.

Cook, a Marshall Scholar and the first Black woman to serve as a Fed governor, was confirmed by the Senate prior to taking her seat. Her team filed suit late last month arguing that the administration did not provide a hearing or adequate opportunity to respond before the removal and that the alleged conduct did not meet the statutory standard for removal. The dispute arrives amid a fraught political backdrop: Mr. Trump has repeatedly criticized Fed policy and signaled he will nominate governors he believes favor lower interest rates.

Main Event

In a written order issued late Tuesday, Judge Jia Cobb found that the statutory phrase allowing removal of a governor “for cause” is limited to misconduct occurring during official duties in office and tied to a governor’s capacity to perform statutory responsibilities. Cobb concluded the allegations cited by the White House were unlikely to satisfy that narrow standard, and that Cook was not afforded required procedural protections before being removed.

The court specifically directed the Board of Governors and Chair Jerome Powell to let Cook continue functioning as a sitting member while the litigation continues. That injunction preserves her voting rights and participation in policy debates, including the upcoming Sept. 16–17 meeting where the Fed is widely expected to reduce its benchmark short-term rate by 25 basis points to a range around 4.00–4.25 percent.

The White House has signaled it will appeal the injunction. Administration lawyers have argued the allegations—centering on mortgage filings for two properties Cook bought in 2021—provide cause to remove her. Cook’s legal team denied the claims and argued she was denied due process because no pre-removal hearing or opportunity to rebut the allegations was provided.

Analysis & Implications

The ruling is an immediate rebuff to a first-of-its-kind bid by a president to remove a Fed governor and underscores the judiciary’s role in policing constitutional and statutory boundaries around independent agencies. If left unchecked, legal scholars warn, a presidential power to remove governors for vague reasons would weaken the governors’ insulation from electoral politics and could pressure monetary policy toward short-term political goals.

Economically, the decision preserves the current balance of viewpoints on the seven-member board through the litigation. That is consequential because governors and the Board influence both communications and voting on the Federal Open Market Committee, which sets the federal funds rate. A change to the board’s makeup could tilt policy toward lower rates, a move that some economists say risks rekindling inflationary pressures and could raise investor expectations of future inflation.

Politically, the lawsuit and injunction may encourage further legal scrutiny of presidential authority over independent agencies. A successful appeal by the White House would test whether courts accept a broader view of “for cause” removal tied to pre-office conduct; opponents argue that would effectively permit firing for political disagreements. The case could therefore shape separation-of-powers doctrine and congressional choices about institutional safeguards for independent entities.

Comparison & Data

The data above frames why participation by each governor matters: even a single vote can influence guidance and the trajectory of short-term rates, which ripple through borrowing costs for mortgages, auto loans and government debt. Investors watch both the composition of the board and the FOMC’s votes for clues about future policy and inflation expectations.

Reactions & Quotes

“President Trump has not stated a legally permissible cause for Cook’s removal,” the court wrote in its ruling, describing the statutory standard for removing a governor as narrowly tied to actions affecting performance of official duties.

U.S. District Court, D.C. (Judge Jia Cobb)

The judge’s language emphasized the limited reach of the removal power and the importance of on-the-record findings tied to job performance.

“Governor Cook will continue to carry out her sworn duties as a Senate-confirmed Board Governor,” said Cook’s attorney, noting the injunction preserves her board role while the allegations are contested.

Abbe Lowell (Attorney for Lisa Cook)

Cook’s team said the decision vindicates procedural rights and prevents a sudden change to the Fed’s membership without judicial review. The White House did not immediately issue a comment after the ruling.

Unconfirmed

• The specific mortgage-fraud allegations that prompted the Aug. 25 removal have not been adjudicated; details about whether Cook intentionally misrepresented primary-residence status remain contested.
• Whether the White House will succeed on appeal and the timeframe for any appellate decision is uncertain.
• Any future nominations or confirmations that would change the Fed board’s majority are contingent on separate Senate actions and are not guaranteed.

Bottom Line

The injunction preserves the status quo at the Federal Reserve while courts consider whether a president may remove a governor for conduct predating official service. Practically, it ensures Lisa Cook can join deliberations and votes at the Sept. 16–17 meeting, a session markets expect will include a modest rate cut. Legally, the case may become a landmark test of the statutory protections Congress erected to shield the Fed from political removal powers.

Looking ahead, the administration is likely to appeal, so the dispute will move to higher courts where broader questions about agency independence and executive reach will be examined. For markets and policymakers, the most immediate consequence is continuity: the board retains its current membership while the judiciary weighs the limits of presidential authority.

Sources

• Associated Press — news organization reporting on the court ruling and related events
• Federal Reserve — official central bank materials on governance and policy (official)