Judge Blocks Trump from Firing Fed Governor Lisa Cook

A federal judge on Tuesday temporarily blocked President Donald Trump from firing Federal Reserve Governor Lisa Cook, allowing her to retain her seat on the central bank’s board ahead of a critical upcoming policy meeting.

Trump Attempts to Fire Fed Governor Cook

Trump announced his intent to remove Cook last month, claiming she misrepresented two houses as primary residences in 2021. The firing attempt came amid Trump’s repeated pressure on the Fed to lower interest rates and his efforts to find “for cause” grounds to remove Fed Chair Jerome Powell.

Cook, nominated by President Joe Biden in 2022, has denied wrongdoing. Her legal team argued that any errors were clerical and that the dismissal is politically motivated, intended to replace her with loyalists and weaken the Fed’s independence.

Federal Judge Rules No Cause for Removal

U.S. District Judge Jia Cobb in Washington ruled that the president had not demonstrated “cause” for removal under the Federal Reserve Act, which allows firing only for misconduct or neglect of duty while in office. Actions that occurred before a governor’s appointment, Cobb noted, do not meet the statutory threshold.

The judge also found that Cook had been denied due process, as the administration did not provide her with adequate notice before publicly announcing her removal.

Cook’s attorney, Abbe Lowell, praised the ruling:

"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."

Trump Administration to Challenge Ruling in Court

The Trump administration is expected to appeal the ruling. White House spokesman Kush Desai said Trump had “lawfully removed Lisa Cook for cause” and emphasized that the ruling “will not be the last say on the matter.” Legal experts indicate the case could eventually reach the Supreme Court, potentially setting a precedent on presidential authority over Fed governors.

Fed Meeting to Proceed With Cook in Place

By keeping Cook in her position, the ruling preserves a majority of Federal Reserve governors who were not appointed by Trump. This is significant as the Fed prepares for a highly anticipated policy meeting, where analysts widely expect a 25 basis-point interest rate cut to respond to slowing economic growth and inflation pressures.

Cook’s presence ensures that the board maintains a broader range of perspectives in its decision-making at a pivotal time for U.S. monetary policy. Economists and market watchers have noted that abrupt political interference could unsettle financial markets, affecting bond yields, mortgage rates, and investor confidence.

Ruling Confirms Fed Governor Protections

The ruling clarifies that under the Federal Reserve Act, a president can remove a Fed governor only for misconduct or neglect of duty while in office, not for actions taken before appointment. Legal analysts note that this interpretation strengthens the statutory protections designed to keep the Fed independent from political pressure.

Historically, presidents have rarely challenged Fed governors directly. The most notable case involved President Franklin Roosevelt, who attempted to influence the Federal Reserve in the 1930s but did not succeed in removing board members.

Financial experts say maintaining Cook on the board preserves the balance of power at a critical moment, as the Fed prepares to vote on interest rates amid inflation concerns. Allowing political dismissal could unsettle markets by creating uncertainty over the Fed’s decision-making process.

Cook Retains Seat as Court Blocks Removal

Federal Reserve Governor Lisa Cook will remain on the board while the administration’s attempt to remove her is challenged in court. The ruling allows her to participate in the Fed’s upcoming policy meeting and preserves the board’s current balance of voting power.

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