Judge blocks Trump’s attempt to fire Fed Governor Lisa Cook
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A federal judge halts Trump’s effort to remove Fed Governor Lisa Cook, raising concerns over political interference in the central bank’s independence.
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Federal Reserve Board of Governors member Lisa Cook listens during an open meeting of the Board of Governors at the Federal Reserve, June 25, 2025, in Washington. (AP)
A federal judge in Washington, D.C., temporarily blocked on Tuesday US President Donald Trump from firing Federal Reserve Governor Lisa Cook, handing the White House an early setback in an unprecedented legal clash that could reshape the central bank’s independence.
US District Judge Jia Cobb ruled that the administration’s claims, alleging Cook committed mortgage fraud prior to her 2022 Senate confirmation, were unlikely to meet the legal threshold for her dismissal. Cook has denied the allegations.
"President Trump has not identified anything related to Cook’s conduct or job performance as a Board member that would indicate that she is harming the Board or the public interest by executing her duties unfaithfully or ineffectively," Judge Cobb wrote.
Trump had announced plans in late August to remove Cook, but the Federal Reserve has maintained that she remains in her post. The central bank declined to comment on Tuesday’s decision, which temporarily blocks her dismissal while the case proceeds.
Wider stakes for Central Bank independence
The legal battle is expected to reach the US Supreme Court and could have profound implications for the Federal Reserve’s ability to set monetary policy without political interference, widely regarded as critical to maintaining inflation control and economic stability.
Trump has repeatedly called for steep and immediate interest rate cuts, sharply criticizing Fed Chair Jerome Powell’s leadership. The Fed is expected to lower rates at its upcoming September 16–17 meeting.
Neither the White House nor Trump commented directly on Judge Cobb’s ruling. Cook’s attorney, Abbe Lowell, welcomed the decision, stating, “This ruling recognizes and reaffirms the importance of safeguarding the independence of the Federal Reserve from illegal political interference.”
Legal gray area over dismissals
Under the Federal Reserve Act, governors may only be removed “for cause,” though the statute offers no clear definition or formal process. No president has ever dismissed a sitting Fed governor, leaving the legal question largely untested in court.
Judge Cobb wrote that the “best reading” of the statute limits removal to misconduct while in office. The fraud allegations against Cook involve mortgage applications for three properties prior to her 2022 confirmation.
Trump and William Pulte, his appointee to lead the Federal Housing Finance Agency, allege that Cook misrepresented property details to secure lower interest rates and tax benefits.
Criminal Probe and Cook’s Defense
The Justice Department has launched a parallel mortgage fraud investigation, with grand jury subpoenas issued in Georgia and Michigan, according to documents seen by Reuters and a source familiar with the matter.
Cook has filed suit against both Trump and the Fed, arguing that the fraud claims are a pretext to punish her monetary policy views. In court filings, she has denied the allegations, stating she “did not ever commit mortgage fraud.” She further argues that even if the claims were true, they would not constitute grounds for dismissal, as they predate her Senate confirmation.
The Trump administration maintains that the president has broad authority to remove a Fed governor and that courts lack jurisdiction to intervene. That position sets the stage for a potential constitutional showdown over the separation of powers between the executive branch and the central bank.
'Serious danger' if Trump controls US monetary policy: ECB
Earlier this month, European Central Bank chief Christine Lagarde warned that the global economy could face serious risks if US President Donald Trump succeeds in reshaping the Federal Reserve.
Speaking to France’s Radio Classique, Lagarde said it would be "very difficult" for Trump "to completely swing the majority" of the Fed’s policymaking body in his favor. But she cautioned that, if he managed to do so, "it would be a very serious danger for the US economy and for the world economy."
Trump is seeking to remove Cook, a move critics argue is aimed at filling the central bank with allies willing to push for lower interest rates. His push underscores broader concerns over Trump's Federal Reserve appointments and their potential impact on monetary independence.
Lagarde stressed that central bank policies play a critical role in maintaining price stability and securing "optimal" employment. Allowing political interference in this process, she warned, would create severe US monetary policy risks with ripple effects worldwide.
"If it depended on the diktats of one person or another … the balance of the US economy, and consequently the effects it would have on the entire world, would be very worrying," she said.
Cook, appointed in 2022, has become a target of Trump’s efforts to alter the Fed’s direction. Her potential removal highlights the broader stakes in the debate over Fed independence and raises concerns among economists about mounting global economic danger if the institution’s autonomy is eroded.
