A federal judge has temporarily stopped President Donald Trump from removing Federal Reserve Governor Lisa Cook. The decision allows her to remain in her role while challenging the allegations.
US District Judge Jia Cobb in Washington granted Cook’s request to continue working, giving her a temporary victory in the ongoing dispute over her employment.
Cook may now attend the Federal Reserve policy meeting on September 16-17, where she can vote on potential interest rate changes.
The case stems from allegations that Cook committed mortgage fraud by misrepresenting her primary residences for loans in Michigan, Georgia, and Massachusetts in 2021.
Trump’s letter to Cook cited “deceitful and potentially criminal conduct” as justification for firing her immediately after the allegations became public.
Cook’s lawyer, Abbe Lowell, said the ruling “recognizes and reaffirms” the Federal Reserve’s independence from political influence, which she called crucial for economic stability.
Lowell added that allowing Trump to remove Cook over “unsubstantiated and vague allegations” could harm the US financial system and undermine the rule of law.
Judge Cobb said the mortgage misconduct claims likely did not meet the legal standard for “cause” under the Federal Reserve Act and may have violated Cook’s due process rights.
She noted that “the bases for removal of a member of the Board of Governors are limited to grounds concerning a Governor’s behavior in office.”
Cobb also highlighted the public interest in maintaining the Fed’s independence, which she said helps promote stability in the banking system.
The Justice Department has opened a criminal investigation into the mortgage allegations against Cook but declined to comment on the ongoing litigation.
A Fed spokesperson said the agency will respect the court’s decision and has not taken a position on the legal fight.
Trump’s attempt to remove Cook follows prior actions targeting Fed Chair Jerome Powell, whom he criticized for not lowering interest rates quickly enough.
Cook’s lawyers argue any errors in her mortgage applications were unintentional clerical mistakes and did not harm anyone.
The judge rejected the Justice Department’s request to pause her ruling, allowing the case to move quickly toward potential appeals in higher courts.
If the administration appeals, the US Supreme Court may ultimately decide whether Trump can remove a sitting Fed governor under the current law.
Cook’s case has become a focal point in debates over political control of the Federal Reserve and the limits on presidential authority.
Observers say the ruling could set an important precedent for protecting the Fed from political interference and ensuring its leaders can act independently.
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This temporary decision gives Cook a short-term reprieve, but the legal battle is likely to continue as both sides prepare for appeals and possible Supreme Court review.
The outcome could influence not just her job but also broader questions about the independence and stability of US financial institutions.
