A Washington court has thrown the brakes on Donald Trump’s bid to remove Federal Reserve Governor Lisa Cook, marking an early clash between the White House and the central bank that could reshape the boundaries of its independence.
U.S. District Judge Jia Cobb ruled that Cook will stay in office while the case unfolds, rejecting the administration’s argument that alleged mortgage fraud from years before her appointment was valid grounds for dismissal. Cobb noted that nothing about Cook’s current performance suggested she was failing her duties or harming the public interest.
Trump moved to fire Cook in late August, accusing her of misrepresenting mortgage applications prior to her 2022 Senate confirmation. The Justice Department has since opened a probe, but Cook has flatly denied the allegations, calling the claims a political pretext to silence her monetary policy stance.
The decision ensures Cook, the first Black woman to serve on the Fed’s Board of Governors, remains at her post for now. Her lawyers praised the ruling as a vital stand against “illegal political interference” in the central bank.
The legal fight cuts to the heart of a rarely tested statute: Fed governors can only be removed “for cause,” though the law never defined what that means. No president has ever attempted to fire a Fed governor before. Cobb interpreted the statute narrowly, finding that removal should be tied to misconduct committed while in office—not prior to confirmation.
The dispute is expected to travel all the way to the U.S. Supreme Court, with enormous consequences for the Fed’s ability to act independently on interest rates. Trump has repeatedly demanded immediate and steep cuts, lashing out at Fed Chair Jerome Powell. Markets now await the central bank’s September 16–17 meeting, where a rate cut is anticipated.
The White House has not commented on the ruling, and Trump brushed off reporters’ questions. For now, Cook remains firmly in place, and the long battle over the Fed’s independence has only just begun.
