A federal judge on Tuesday blocked President Donald Trump from removing Lisa Cook from the Board of Governors of the Federal Reserve, ruling that his attempt to oust her over unproven mortgage-fraud allegations likely violated federal law and her constitutional rights.
U.S. District Judge Jia Cobb in Washington granted Cook’s request for an injunction that allows her to remain on the Fed’s seven-member board while her lawsuit moves forward. The decision comes less than a week before the central bank’s next policy meeting on Sept. 16–17, ensuring Cook can participate in deliberations over interest rates.
Cook, appointed by President Biden to a 14-year term that runs until 2038, was fired by Trump in August after the head of the Federal Housing Finance Agency publicized allegations that she had improperly claimed multiple residences on mortgage documents in 2021, before she joined the Fed. Trump announced her removal in a letter posted to social media, citing “deceitful and potentially criminal conduct.”
The firing marked the first attempted ‘for cause’ removal of a Fed governor in the central bank’s 111-year history. Presidents have rarely attempted to remove government officials protected by ‘for cause’ clauses. Judge Cobb notes in her opinion President Taft’s 1913 removal of two members of the Board of Appraisers following an extensive inquiry, and mentions that President Ford considered removing a Civil Aeronautics Board member in the 1970s.
The legal landscape has shifted significantly in recent years, however. The Supreme Court has narrowed removal protections for some agency heads, finding that certain arrangements unconstitutionally infringe on presidential authority over the executive branch. But the Court has suggested the Federal Reserve may warrant different treatment given its unique structure and role in monetary policy.
In a recent order, the Supreme Court stayed a decision by a lower court that would have temporarily barred the president from removing Rebecca Slaughter, a commissioner of the Federal Trade Commission. The administrative stay represents the strongest indication yet that the justices may be poised to overturn the 1935 precedent Humphrey’s Executor v. United States, in which the court upheld “for cause” protections for some government officials.
Unlike those cases, where the administration offered no statutory justification or the for cause provision was challenged by third parties instead of a president attempting to remove an official, the Trump administration has said it has sufficient cause to remove Cook, bringing the question of what counts as cause for removal directly before the court. The Federal Reserve Act first put in place the “for cause” protection in 1913. It was briefly removed in 1933 and then restored in 1935, shortly after Humphrey’s Executor was decided. Unlike many such provisions in the U.S. code, however, the Federal Reserve Act does not define what counts as cause or explicitly limit it to actions taken in office.
Judge Cobb ruled that Trump’s justification was legally insufficient under the Federal Reserve Act, which permits a governor’s removal only “for cause.” She concluded that Congress intended that phrase to cover misconduct or inability to perform duties while in office, not alleged behavior from before appointment. “Removal was not meant to be based on the President’s assumptions about the official’s future performance as extrapolated from unproven conduct dating from before they assumed the office,” Cobb wrote.
The judge also found Cook likely to prevail on her claim that the firing violated her Fifth Amendment due-process rights, because she received no advance notice or hearing. Announcing her removal via social media, Cobb said, failed to satisfy basic constitutional protections.
In issuing the order, the court treated Cook’s request for a temporary restraining order as a motion for a preliminary injunction—a stronger form of relief after adversarial briefing. That move provides Cook with greater security while the case proceeds, but also makes the ruling immediately appealable. The Justice Department is expected to seek review from the D.C. Circuit Court of Appeals, and the case could quickly reach the Supreme Court.
The White House said Trump “lawfully removed Lisa Cook for cause due to credible allegations of mortgage fraud.” Cook’s lawyer Abbe Lowell countered that the decision “recognizes and reaffirms the importance of safeguarding the independence of the Federal Reserve from illegal political interference.”
The dispute sets up an unprecedented test of presidential power over the central bank. Recent Supreme Court rulings have narrowed job protections at other independent agencies, but the Fed has historically enjoyed greater insulation from political influence. Earlier this year, the Court suggested in a separate case that Federal Reserve governors may have stronger tenure protections than officials at other regulators.
The fight comes as Trump presses the Fed to cut interest rates and prepares to nominate Stephen Miran to a vacant board seat. Fed Chair Jerome Powell and the rest of the board were named as defendants in Cook’s lawsuit but have not taken a position, saying they will abide by the courts. A Fed spokesman declined to comment Tuesday.
Cook’s lawsuit alleges the allegations of mortgage fraud were a pretext for Trump to clear a seat for his own appointee. The Justice Department has opened a probe into the claims, which her lawyers dismiss as either baseless or the product of clerical errors.
Cobb ruled that the public interest favors keeping Cook in place. “The public interest in Federal Reserve independence weighs in favor of Cook’s reinstatement,” she wrote.
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