The Trump administration on Thursday asked a federal appeals court to order the immediate removal of Federal Reserve Governor Lisa Cook by Monday, seeking to prevent her from participating in the central bank’s next interest-rate decision.
President Trump had sought to fire Cook on Aug. 25, but U.S. District Judge Jia Cobb ruled late Tuesday that the removal was illegal and restored her to the Fed’s Board of Governors. Judge Cobb said the administration had not satisfied the statutory requirement that Fed governors may be dismissed only “for cause,” a standard she interpreted as limited to misconduct while in office; Cook did not join the Fed until 2022.
In filings asking an appeals court for an emergency decision by Monday, the administration argued that Cook’s alleged pre-office conduct nevertheless “indisputably calls into question Cook’s trustworthiness and whether she can be a responsible steward of the interest rates and economy.” The administration’s lawyers pointed to allegations that Cook had claimed two properties as primary residences in July 2021 — a practice that can result in a lower mortgage rate and smaller down payment than if a property is declared a rental or second home. Cook has denied the charges.
The appeal seeks to reverse Judge Cobb’s ruling before the Federal Reserve begins its policy meeting Tuesday and announces its decision on interest rates Wednesday. Officials and analysts expect the central bank to reduce its benchmark rate by a quarter-point at that meeting to about 4.1 percent.
The legal fight reflects an unusually direct effort by the White House to remove a sitting Fed governor and underscores tensions between the administration and the central bank. Federal law limits presidential removal of governors to cases of cause, a protection designed to preserve the Federal Reserve’s independence in conducting monetary policy.
Cook, who joined the Fed’s board in 2022, has publicly denied any wrongdoing related to the mortgage claims. In her reinstatement order, Judge Cobb emphasized that the statutory “for cause” language refers to conduct while holding office and that the administration had not shown it met that threshold.
If the appeals court issues the emergency order sought by the administration, Cook would be removed before the Fed’s rate-setting vote. If the court declines to act or rules for Cook, she would remain on the board and be eligible to participate in the central bank’s decision. The appeals court’s timetable and whether it will expedite the case to meet the administration’s Monday deadline were not immediately clear.
The case adds complexity to the Fed’s policy process at a moment when the central bank is preparing to begin cutting its benchmark rate as inflation moderates. Legal proceedings over the status of a governor could have procedural and political implications for the Fed’s operations, though officials have said the central bank will continue to carry out its responsibilities.
The dispute began after the president moved in late August to oust Cook, citing the mortgage-related allegations. The administration has characterized the matter as bearing on Cook’s fitness to serve, while Cook and her supporters have maintained that the firing attempt violated the statutory protections afforded to Fed governors and threatened central bank independence. The appeals court’s response will determine the immediate composition of the Fed’s board for the upcoming policy decision.