A federal appeals court on Monday blocked President Donald Trump from immediately removing Federal Reserve Governor Lisa Cook from her post, preserving a lower court injunction that reinstated her to the central bank’s Board of Governors.
The U.S. Court of Appeals for the D.C. Circuit issued a 2-1 ruling that kept in place U.S. District Judge Jia Cobb’s preliminary injunction, which last week found that Trump’s attempt to oust Cook likely violated the Federal Reserve Act and Cook’s constitutional due process protections. The appeals panel included Judges Gregory Katsas, Michelle Childs and Brad Garcia.
The decision was a near-term setback for the administration, which had quickly appealed Judge Cobb’s order and asked the appeals court for emergency relief. The Justice Department argued in its appeal that the president acted properly in seeking Cook’s removal, saying in filings, "When Governors by misconduct or gross neglect erode the foundations of such confidence, the President acts properly and lawfully by removing them." The administration has cited allegations of mortgage fraud as the basis for the removal.
Cook, who has denied any wrongdoing, and her lawyers sued the president shortly after he announced on social media last month that he would remove her before the end of her 14-year term. They argued that the president lacked sufficient cause to remove a Federal Reserve governor midterm and that the move violated statutory protections under the Federal Reserve Act as well as her due process rights.
Judge Cobb’s preliminary injunction restored Cook to her role while the case proceeds and concluded that the plaintiffs had shown a likelihood of success on the merits. The D.C. Circuit’s decision to preserve that injunction means Cook will remain in her position for now, even as the administration prepares to escalate the case.
Legal experts and court watchers say the case is likely to reach the Supreme Court because it raises novel and consequential questions about the degree of independence afforded to Federal Reserve governors and the president’s authority to remove them for cause. The dispute marks the first known effort by a sitting president to remove a Fed governor on a "for cause" basis and thus tests the boundaries of statutory protections for independent federal officials.
The Federal Reserve Board of Governors oversees monetary policy and plays a central role in the U.S. financial system. Governors are appointed for staggered 14-year terms to insulate the board from political pressure and to promote stable, long-term policy decision-making. The Federal Reserve Act constrains removal of governors to specific circumstances, a statutory scheme that the courts will now be asked to interpret.
In recent years, disputes over presidential removal authority have reached the Supreme Court, producing rulings that have clarified but not entirely resolved the balance between executive power and independence of certain federal officials. This case will test whether those precedents and the statutory text combine to bar a president from removing a Fed governor absent the kinds of misconduct or neglect enumerated by law.
The appeals court did not resolve the broader legal questions on Monday, instead focusing on whether the district court erred in granting immediate relief. By leaving the injunction intact, the D.C. Circuit allowed the underlying litigation to proceed while preserving the status quo. The Trump administration is expected to seek rapid review by the Supreme Court, which could decide whether to expedite consideration given the potential implications for the governance of the Federal Reserve.
Both sides will now prepare for further proceedings. Cook and her legal team will continue to press their claim that the attempted removal is unlawful, while the Justice Department and White House lawyers will argue that the president’s removal authority is appropriate in this instance. The case is likely to draw interest from financial markets, policymakers and legal scholars because of its possible impact on central bank independence and the separation of powers.
The appeals court action represents the latest chapter in a fast-moving legal fight that could reshape the legal framework governing independent federal agencies. The case will proceed in federal court, and further appeals to the Supreme Court are anticipated.
This is a developing story and may be updated as additional court filings and decisions become available.