Judge temporarily blocks Trump’s move to oust Lisa Cook from the Fed

A federal judge on Tuesday temporarily blocked U.S. President Donald Trump’s order to remove Lisa Cook as a governor of the Federal Reserve. The decision keeps the economist in her position while the legal dispute is resolved. The case will likely end up before the U.S. Supreme Court.

The ruling by Federal District Judge Jia Cobb of Washington, D.C., marks a setback for Trump, who seeks to oust Cook over alleged mortgage fraud, despite her facing no charges.

Cook’s defense argued that the move was politically motivated and, according to her lawyers, the president intends to place allies in the central bank to force interest rate cuts.

In her ruling granting a preliminary injunction, Judge Jia Cobb held that the arguments Trump cited to remove Cook did not meet the requirements of “for cause,” noting that the alleged irregularity occurred before she assumed her role as a Federal Reserve governor. Cook signed the mortgage documents in 2021, about a year before joining the board, after being nominated by president Joe Biden.

The ruling also states that the Trump administration’s Department of Justice actions against Cook violated the “principle of due process,” rejecting the idea that the president has broad powers to remove a governor in the manner he attempted.

“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,” the ruling said.

The judge noted that posts against Cook by Federal Housing Finance Agency Director Bill Pulte, as well as statements from the White House on social media, do not constitute adequate evidence of the accusations.

As a result of this favorable ruling, Cook will be able to attend the Federal Reserve’s monetary policy meeting on September 16–17 to vote on a possible interest rate cut.

Legal dispute

The Department of Justice opened an investigation into Cook after Pulte alleged that the governor committed fraud by claiming that homes she purchased in Michigan and Georgia were her “primary residence,” in order to secure more favorable mortgage terms. Banks generally charge lower interest rates on primary residences than on second homes or investment properties, assuming the risk of default is lower.

Cook, who has denied the allegations, filed a lawsuit in late August in a federal court in Washington, arguing that the president lacks the authority to terminate her term — which was set to expire in 2028 — and denouncing an “unprecedented and illegal attempt” to remove her from the Federal Open Market Committee (FOMC), the Fed’s governing body.

Forcing Cook’s removal would give Trump the chance to secure a four-to-seven majority on the Board of Governors, after Adriana Kugler announced her early resignation on August 1.

Cook became the first African-American woman to join the Federal Reserve Board of Governors in Washington when she was appointed by Biden in 2022.

Sign up for our weekly newsletter to get more English-language news coverage from EL PAÍS USA Edition