Court blocks Trump’s attempt to remove Fed Governor Lisa Cook

A federal judge in Washington, D.C., has temporarily stopped President Trump from firing Lisa Cook from the Federal Reserve Board after Trump tried to remove her over claims of mortgage fraud.

This legal standoff is the first of its kind, as no president has ever attempted to fire a Fed governor “for cause” before. The ruling was issued late Tuesday night by Judge Jia Cobb, who granted a preliminary injunction that prevents the termination while the case plays out in court.

The case exploded after Trump publicly announced Lisa’s removal on August 25, pointing to tweets and claims from Federal Housing Finance Agency Director Bill Pulte, who accused Lisa of mortgage fraud tied to two properties she owns.

Lisa signed those real estate documents before joining the Fed. Trump called that fraud and said it made her unfit to oversee the nation’s financial system. Lisa says she did nothing wrong. Her lawyers say this is a political hit job disguised as a legal action.

Judge blocks Powell from enforcing Trump’s order

In her ruling, Cobb said Lisa made a “strong showing” that her firing violated the Federal Reserve Act, which only allows governors to be removed for behavior while in office. She wrote that the “best reading” of the law means you can’t just drag up someone’s past actions and call it grounds for firing.

“For cause,” she ruled, “does not contemplate removing an individual purely for conduct that occurred before they began in office.”

That’s not stopping the Trump administration from trying. White House spokesperson Kush Desai said in a statement that Trump “lawfully removed Lisa Cook for cause due to credible allegations of mortgage fraud from her highly sensitive position overseeing financial institutions on the Federal Reserve Board of Governors.”

He added, “This ruling will not be the last say on the matter, and the Trump Administration will continue to work to restore accountability and confidence in the Fed.”

Cobb’s order also blocks Jerome Powell and the rest of the Fed Board from doing anything to help enforce Trump’s decision. The ruling stops them from “effectuating in any manner” Lisa’s removal.

That means she stays on the job, and will participate in the Fed’s next meeting starting September 16, where interest rate cuts are expected to be on the table.

Lisa stays, Trump pushes ahead with new nominee

Lisa is the first Black woman to ever serve as a governor on the Federal Reserve Board. If Trump had succeeded in removing her, he would’ve gained even more influence over the seven-member board by filling her seat with another ally. He’s already planning new appointments.

On Wednesday, the Senate Banking Committee will vote on Trump’s pick, Stephen Miran, who chairs the Council of Economic Advisers. He’s lined up to replace Adriana Kugler, who resigned unexpectedly in August.

Lisa’s lawyer, Abbe Lowell, called the ruling a win for the Fed’s independence. “Today’s ruling recognizes and reaffirms the importance of safeguarding the independence of the Federal Reserve from illegal political interference,” Lowell said.

He warned that removing Lisa “on unsubstantiated and vague allegations would endanger the stability of our financial system and undermine the rule of law.” He said Lisa “will continue to carry out her sworn duties as a Senate-confirmed Board Governor.”

The case is far from over. The Supreme Court is expected to make the final call on whether Trump’s removal attempt has legal grounds. Until then, Lisa keeps her seat at the table.

At the last court hearing on August 29, Lowell didn’t hold back when challenging the White House’s case. “You can’t have Director Pulte’s crazy midnight tweets be the cause,” he told Cobb during the hearing.

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