TLDR
- US federal judge halts Trump’s attempt to fire Fed Governor Lisa Cook while legal battle proceeds.
- Court finds Trump’s removal of Lisa Cook likely unlawful, protecting Fed’s independence.
- Lisa Cook’s firing attempt raises legal questions about presidential authority over the Federal Reserve.
- Judge’s ruling upholds Fed’s independence, blocking Trump’s removal of Cook based on mortgage fraud claims.
On Tuesday, a federal judge temporarily blocked President Donald Trump’s move to remove Lisa Cook from the Federal Reserve Board of Governors. Judge Jia Cobb, who issued the emergency order, found that the claims against Cook were insufficient grounds for her removal under the Federal Reserve Act. The decision comes amid a high-stakes legal battle over the independence of the Federal Reserve, a cornerstone of US monetary policy.
Legal Challenge to Lisa Cook’s Removal
The case centers on Trump’s decision to fire Lisa Cook, a Biden appointee, citing alleged mortgage fraud committed before she assumed her role at the Federal Reserve. The allegations were first raised by Bill Pulte, the Federal Housing Finance Agency director, who claimed that Cook had inaccurately reported information on mortgage applications. These allegations prompted the Justice Department to launch a criminal investigation.
However, Judge Cobb ruled that the claims against Cook, which date back to before her Senate confirmation in 2022, were unlikely to justify her removal from the Fed.
The ruling blocked Trump’s attempt to fire Cook while her lawsuit against the removal proceeds. Cobb’s order cited the Federal Reserve Act, which permits the removal of a Fed governor only for misconduct that occurs during their time in office, not before.
Donald Trump’s Argument for Removal
The Trump administration had argued that the President has broad authority to remove Fed governors at his discretion. The administration’s lawyers maintained that Lisa Cook’s alleged fraud undermined her competence and trustworthiness, justifying her removal from the central bank.
They also argued that courts should defer to the president’s judgment on matters of removal.
In his ruling, Judge Cobb rejected this broad interpretation of the President’s power, stating that the law governing the Fed specifically limits the grounds for removal. “Removal was not meant to be based on the President’s assumptions about the official’s future performance as extrapolated from unproven conduct,” Cobb wrote.
A Case with Broader Implications for Fed Independence
Cook’s legal team argued that the attempt to remove her was politically motivated, seeking to undermine the independence of the Federal Reserve. They claimed that the removal was not based on any alleged wrongdoing while Cook was in office but rather a pretext to vacate her seat for Trump’s own political purposes.
Abbe Lowell, Cook’s attorney, called the decision a victory for the Fed’s independence. “This ruling recognizes and reaffirms the importance of safeguarding the independence of the Federal Reserve from illegal political interference,” he said.
Cook herself has denied any wrongdoing, arguing that the fraud claims are unsubstantiated and should not impact her ability to serve on the Federal Reserve Board.
