A federal judge has blocked President Donald Trump’s attempt to remove Federal Reserve board member Lisa Cook, allowing her to stay in her role while challenging the firing in court.
The U.S. District Court for the District of Columbia granted Cook a preliminary injunction on Tuesday. This prevents her removal as the legal dispute unfolds. Judge Jia Cobb said Cook is likely to succeed in her lawsuit, which seeks to overturn Trump’s dismissal.
Trump announced he was firing Cook on August 25, citing allegations that she committed mortgage fraud on two properties purchased in 2021. The claims, raised by one of Trump’s appointees, accused Cook of designating both homes as her primary residence. This could have lowered her down payments and mortgage rates. The allegation mirrors one Trump has previously made against Democratic Senator Adam Schiff of California.
Cook has received strong support from the economics community. Over 450 economists, including Nobel Prize winners, signed an open letter defending her. They argue that the accusations do not provide a valid reason for her removal from the central bank’s board.
Judge Cobb noted that under Federal Reserve rules, governors may only be removed “for cause.” The judge explained that this applies only to actions taken while a governor is in office. She wrote that Trump had not identified a legally valid reason to remove Cook.
“The removal of a Federal Reserve governor extends only to concerns about the board member’s ability to effectively and faithfully execute their statutory duties, in light of events that have occurred while they are in office,” Judge Cobb said.
The court’s ruling comes as a significant setback for Trump, who has sought greater influence over the independent U.S. central bank. The Fed sets short-term interest rates to meet Congress’s goals of stable prices and maximum employment. Its independence is traditionally seen as essential for avoiding political pressure and making decisions in the public interest.
Cook’s continued presence on the board allows her to participate in the Fed’s upcoming fall meeting on September 16-17. Analysts expect the central bank to reduce its key short-term interest rate by a quarter-point to a range of 4 percent to 4.25 percent.
Trump’s administration is expected to appeal the ruling. The legal battle highlights ongoing tensions between the White House and the central bank. Historically, attempts by presidents to remove Fed governors are rare and controversial, as the Fed’s structure is designed to insulate it from political influence.
Cook’s attorney, Abbe Lowell, said the ruling protects both the financial system and the rule of law. “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,” he said.
The case has sparked debates about presidential authority and central bank independence. Economists warn that interfering with the Fed could unsettle markets and weaken confidence in U.S. monetary policy. Cook’s defense and the court’s decision reaffirm the principle that Fed governors are not political appointees who can be dismissed at will.
This decision also reflects broader concerns about transparency and accountability in government institutions. By blocking Cook’s removal, the court has underscored the legal safeguards protecting public officials from politically motivated dismissals.
As the appeal process moves forward, Cook will continue her work on the board, contributing to key policy decisions. Her situation illustrates the delicate balance between presidential power and institutional independence, especially in financial regulation.
The ruling is likely to have lasting implications. It reinforces that the Fed operates above political pressures and emphasizes that allegations unrelated to a governor’s official duties do not justify removal. Cook’s case could set a precedent for future disputes between the executive branch and independent agencies.
