A federal judge on Tuesday granted Federal Reserve Governor Lisa Cook a preliminary injunction that prevents President Donald Trump from removing her from the central bank while her lawsuit challenging the firing proceeds through the courts.
U.S. District Judge Jia Cobb, a Biden appointee, wrote that Cook is likely to prevail on the merits of her challenge and that the law governing the Federal Reserve limits removal of governors to "for cause" standards tied to actions taken while in office. The court also directed the Fed’s board of governors and its chair, Jerome Powell, to allow Cook to continue to operate as a member of the board for the duration of the litigation.
Cobb wrote that "the removal of a Federal Reserve Governor extends only to concerns about the Board member’s ability to effectively and faithfully execute their statutory duties, in light of events that have occurred while they are in office," and that Trump had not identified a legally permissible cause for Cook’s removal. The ruling is likely to be appealed.
Cook sued after Trump announced on Aug. 25 that he was firing her, citing allegations raised by Bill Pulte, a Trump appointee to the agency that regulates Fannie Mae and Freddie Mac. Pulte alleged that Cook misrepresented two properties she bought in 2021 as primary residences to obtain more favorable mortgage terms. Attorney General Pam Bondi’s Justice Department issued subpoenas last week into the mortgage-related claims.
In a social-media post announcing the firing, Trump said he lacked confidence in Cook’s integrity, asserting "deceitful and potentially criminal conduct in a financial matter." Cook has refused to leave her post and sought judicial relief. Her lawyer, Abbe Lowell, said in a written statement that allowing her removal on "unsubstantiated and vague allegations would endanger the stability of our financial system and undermine the rule of law," and that Cook would continue to carry out her duties as a Senate-confirmed governor.
The decision preserves Cook’s ability to participate in the Federal Reserve’s Sept. 16-17 policy meeting, at which the central bank has signaled it is leaning toward a quarter-point cut in its key short-term interest rate to a range of 4.00 percent to 4.25 percent. The move marked an unusually direct intervention by the White House in the leadership of an institution that Congress designed to be insulated from daily political pressures.
Federal Reserve governors serve long, staggered terms to limit a president’s ability to reshape the board in a single term, and the statute governing removal has generally been understood to bar dismissal for policy disagreements. Legal experts and congressional protections emphasize that governors are not subject to the same at-will removal power that presidents have over cabinet secretaries.
Cook, who is the first Black woman to serve as a Fed governor, is an academic and former Marshall Scholar with degrees from Oxford University and Spelman College, and previously taught at Michigan State University and Harvard’s Kennedy School. Her continued presence on the board preserves the current seven-member balance; if removed, her seat would create an opportunity for Trump to nominate a successor who might realign the board’s ideological balance.
Trump has repeatedly pressed Powell and other Fed officials to cut interest rates more aggressively, and has criticized the central bank’s approach to fighting inflation. Powell has maintained that rates should remain restrictive until inflation is clearly on track toward the Fed’s 2 percent goal, though recent signals have indicated the bank was preparing to lower its policy rate. Removing a governor and replacing them with a presidential ally could alter the dynamics of future policy votes, a point underscored by the administration’s move to dismiss Cook.
The injunction does not resolve the underlying allegations about Cook’s mortgage filings; it pauses the immediate effect of the firing while the court addresses whether Trump had lawful authority to remove a Fed governor for actions that occurred before her service on the board. The Justice Department subpoenas and Pulte’s claims remain part of the record and are likely to be examined in subsequent proceedings.
Tuesday’s ruling is an early test of the judiciary’s role in policing the limits of presidential authority over an independent monetary institution. It ensures Cook will remain an active participant in near-term policy deliberations at the Fed while the legal dispute is litigated.