A federal judge late Tuesday temporarily blocked President Trump’s attempted ouster of Federal Reserve board of governors member Lisa Cook.
U.S. District Judge Jia Cobb acknowledged that the firing and Cook’s subsequent legal challenge raise “many serious questions” that the courts have not mulled before, but said that at this preliminary stage, Cook made a “strong showing” that her removal violated the Federal Reserve Act’s “for cause” provision.
The judge explained that the “best reading” of the provision is that the premise of a Fed governor’s removal is limited to grounds concerning their behavior in office and whether they have been “faithfully and effectively” executing their statutory duties.
““For cause” thus does not contemplate removing an individual purely for conduct that occurred before they began in office,” Cobb wrote in a 49-page ruling.
Trump announced Cook’s dismissal last month, citing allegations of mortgage fraud raised in a criminal referral from the Federal Housing Finance Agency (FHFA) as “cause” for her removal.
The move threw into question the Fed’s longstanding independence from political influence, though the White House insisted that Trump exercised his “lawful authority” to remove Cook for cause.
The Aug. 15 criminal referral from FHFA Director Bill Pulte, cited by Trump, alleged that Cook deemed properties in Michigan and Georgia as both primary residences, weeks apart in 2021. Pulte later said he filed a second criminal referral for Cook, alleging she represented a third property as her “second home,” despite referencing it in other government documents as an investment or rental property.
Cook’s lawyer, Abbe Lowell, argued in court papers that Cook could not be fired for mortgage information that was available during her confirmation process. The Senate confirmed her in May 2022, and her lawyer said the alleged contradictions were disclosed in documents sent to both the Senate and the White House before then.
In a statement to The Hill, Lowell said the ruling Tuesday reaffirms the importance of protecting the Fed’s independence from “illegal political interference.”
“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. “Governor Cook will continue to carry out her sworn duties as a Senate-confirmed Board Governor.”
The Justice Department signaled in previous court filings that it would appeal if Cobb prevailed. It argued that making contradictory statements in financial documents is “more than sufficient ground” for removing a senior financial officer, even if a criminal burden of proof could not be sustained.
The Hill requested comment from the White House.
