WASHINGTON: A federal judge has temporarily blocked President Donald Trump from removing Federal Reserve Governor Lisa Cook, marking an early setback for the White House in a legal battle that could reshape the central bank’s long-standing independence.
US District Judge Jia Cobb in Washington ruled Tuesday that the administration’s claims of mortgage fraud against Cook were unlikely to constitute valid grounds for her removal.
“President Trump has not identified anything related to Cook’s conduct or job performance as a Board member that would indicate that she is harming the Board or the public interest by executing her duties unfaithfully or ineffectively,” Cobb wrote.
Cook, the first Black woman to serve as a Fed governor, has denied any wrongdoing, saying she “did not ever commit mortgage fraud.”
Unprecedented challenge to the Fed
Trump moved to fire Cook in late August, alleging she misrepresented details on three mortgage applications before her Senate confirmation in 2022. The Justice Department has opened a probe, issuing subpoenas in Georgia and Michigan.
Cook responded with a lawsuit against Trump and the Fed, arguing that the claims were a pretext to remove her over her monetary policy stance.
Cobb’s preliminary ruling halts the dismissal while litigation proceeds, a case expected to ultimately reach the US Supreme Court.
Her decision found that the Federal Reserve Act, which allows governors to be removed only “for cause,” should be interpreted as applying to misconduct while in office. No president has ever removed a Fed governor, and the law has never been tested in court.
Implications for monetary policy
The ruling comes as Trump has demanded steep interest rate cuts and sharply criticized Fed Chair Jerome Powell. The central bank is expected to deliver a rate cut at its Sept 16–17 policy meeting.
Cook’s lawyer, Abbe Lowell, welcomed the decision.
“This ruling recognizes and reaffirms the importance of safeguarding the independence of the Federal Reserve from illegal political interference,” he said.
The Fed declined to comment. The White House also offered no immediate response, and Trump ignored a reporter’s question about the ruling.
What’s at stake
The case carries sweeping implications for central bank autonomy. If Trump ultimately succeeds, it could set a precedent for presidents to reshape the Fed board at will, undermining its ability to act independently to control inflation and manage the economy.
Source: Reuters
