A federal judge on Tuesday temporarily blocked President Donald Trump from removing Federal Reserve Governor Lisa Cook, handing the White House an early legal setback in a dispute with implications for the central bank’s independence.
The preliminary ruling came after Mr. Trump said in August that he had sacked Cook; the Federal Reserve has maintained that she remains a board governor. The court action will keep Cook in her Senate-confirmed role while the legal challenge proceeds.
"This ruling recognises and reaffirms the importance of safeguarding the independence of the Federal Reserve from illegal political interference," Cook’s counsel, Abbe David Lowell, said in a statement. "Governor Cook will continue to carry out her sworn duties as a Senate-confirmed Board Governor." The judge’s order did not resolve the central legal question of whether the allegations advanced by the White House constitute sufficient cause for removal.
The administration, joined by Federal Housing and Finance Authority director William Pulte, accused Cook of inaccurately describing three different properties on mortgage applications, conduct they say may have allowed her to obtain lower interest rates and tax credits. Cook denies the allegations. Late last month she sued Mr. Trump, asking a court to declare his firing order "unlawful and void." The law establishing the Federal Reserve says governors can be removed only "for cause," but does not define that standard or set procedures for removal.
Legal experts and officials have said the dispute raises novel questions about presidential authority over independent agencies. No president has previously attempted to remove a sitting Fed governor, and courts have not yet tested the statute that limits removals. The case is expected to proceed through the federal courts and could ultimately reach the U.S. Supreme Court, where a ruling would have lasting consequences for the central bank’s autonomy.
The timing of the judge’s decision coincides with a Federal Reserve policy meeting next week at which the central bank is expected to announce its first interest rate cut since September 2024. Mr. Trump has repeatedly criticized the Fed’s leadership, including Chair Jerome Powell, and publicly urged lower borrowing costs to support the economy.
The temporary order preserves the status quo on the Fed’s Board of Governors while the court examines the legal questions raised by the president’s action. It does not adjudicate the underlying factual disputes about Cook’s mortgage applications or settle the statutory question of what constitutes removable "cause" for a Fed governor. The case now moves forward into the judicial process, shaping an unusually high-stakes test of the limits of presidential power over an independent monetary authority.