A federal judge has temporarily barred President Donald Trump from removing Federal Reserve Governor Lisa Cook, ruling that she can continue serving on the central bank’s board while her legal challenge proceeds.
US District Judge Jia Cobb in Washington issued a preliminary injunction on Tuesday, finding that Trump’s attempt to oust Cook over allegations of mortgage fraud likely violated federal law and her constitutional rights.
The decision allows Cook to remain in her role and participate in the Federal Open Market Committee’s upcoming policy meeting on September 16 to 17, where officials are set to decide whether to lower interest rates.
In her ruling, Cobb concluded that the alleged misconduct did not amount to “cause” for dismissal under the Federal Reserve Act.
She wrote that the law limits removal of Fed governors to circumstances involving misconduct or failure to perform official duties while in office, not to actions that occurred before their appointment.
“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.
The decision underscores the legal protections designed to shield the central bank’s independence from political pressure.
The Justice Department is expected to appeal Cobb’s ruling, and the case could ultimately reach the US Supreme Court.
In a statement, White House spokesman Kush Desai said the president “lawfully removed Lisa Cook for cause due to credible allegations of mortgage fraud from her highly sensitive position overseeing financial institutions on the Federal Reserve Board of Governors,” adding that the ruling “will not be the last say on the matter.”
Cook’s attorney, Abbe Lowell, welcomed the ruling, saying it “recognizes and reaffirms” the importance of the Fed’s autonomy.
“Allowing the president to unlawfully remove Governor Cook on unsubstantiated and vague allegations would endanger the stability of our financial system and undermine the rule of law,” Lowell said.
A Federal Reserve spokesperson declined to comment on the ongoing litigation but said the central bank will abide by the court’s decision.