A federal Judge on Tuesday ruled that Lisa Cook can remain in her role on the Federal Reserve’s Board of Governors while her lawsuit challenging President Trump’s attempt to fire her from her post plays out.
“President Trump has not stated a legally permissible cause for Cook’s removal,” U.S. District Judge Jia Cobb, who was appointed by former President Joe Biden, wrote in her ruling, which is likely to be appealed.
Mr. Trump said he is firing Cook over allegations she made false representations on mortgage agreements several years ago, resulting in more favorable loan terms.
“President Trump’s stated cause refers only to allegations regarding Cook’s conduct before she began serving on the Federal Reserve Board,” Cobb wrote. “As discussed above, such allegations are not a legally permissible cause.”
In addition to casting doubt on whether Mr. Trump established cause for Cook’s firing, in issuing the stay, Cobb also ruled that Cook’s right to due process was violated and that she would suffer irreparable harm if the injunction was not granted.
Abbe David Lowell, an attorney representing Cook in her lawsuit, said in a statement to CBS News on Tuesday night, “This ruling recognizes and reaffirms the importance of safeguarding the independence of the Federal Reserve from illegal political interference. Allowing the President to unlawfully remove Governor Cook on unsubstantiated and vague allegations would endanger the stability of our financial system and undermine the rule of law. Governor Cook will continue to carry out her sworn duties as a Senate-confirmed Board Governor.”
CBS News has reached out to the White House for comment.
Under federal law, Fed board members serve for 14-year terms and can only be fired by the president “for cause.” Cook has served on the Fed since being appointed to complete another member’s unexpired term in 2022, and her current term would run until 2038.
Mr. Trump moved to fire Cook on Aug. 26, writing in a letter terminating her from the Fed Board of Governors that he had “sufficient cause” to remove her from the position. The president cited a previous letter from Bill Pulte, director of the Federal Housing Finance Agency, that was sent to Attorney General Pam Bondi alleging Cook made false statements on mortgage agreements.
Pulte, an appointee of Mr. Trump’s, alleged that Cook in 2021 claimed two different properties in Michigan and Georgia as her primary residence on mortgage documents to get better lending terms. Cook has not been charged with any civil or criminal offense.
Cook’s lawyers have previously said in court filings that Mr. Trump’s “unsubstantiated allegation that Governor Cook ‘may have’ or ‘seems’ to have erred in filling out a mortgage form in her capacity as a private citizen-does not amount to ’cause’ for removal within the meaning of the FRA [Federal Reserve Act].”
“None of the alleged misconduct occurred during the performance of Governor Cook’s duties as a Federal Board member,” they wrote. “And the President and Director Pulte have not even alleged explicitly that Ms. Cook benefited from any clerical error, or that such an error was intentional.”
In court arguments Friday, Lowell said Cook was not given notice of the allegations or a chance to respond to them, violating, he argued, her due process rights.
Cook’s lawsuit argues that Mr. Trump’s attempt to oust her is “unprecedented and illegal,” noting it would be the first removal of a governor by the president in the Fed’s 112-year history.
“The President’s effort to terminate a Senate-confirmed Federal Reserve Board member is a broadside attack on the century-old independence of the Federal Reserve System,” Cook’s lawyers wrote in a filing.
They warned that Mr. Trump’s theory of “cause” would allow him to remove any Fed Board member with whom he disagrees on policy, eroding the central bank’s independence and threatening its mission of providing economic stability.
Cobb appeared to agree with their argument, writing in her ruling on Tuesday, “Taken to its logical conclusion, the Government’s argument leads to an absurd result: While admitting that the President cannot remove an official for policy disagreements, the Government claims that under Reagan, a removal on the grounds of a policy disagreement would nevertheless be unreviewable. … This cannot be the case. Such a rule would provide no practical insulation for the members of the Board of Governors. It would mean that the President could, in practice, ‘remove a member … merely because he wanted his own appointees.'”
Cobb also wrote that Mr. Trump “does not address her [Cook’s] in-office conduct at all, let alone provide any examples of how Cook’s performance or personal conduct since assuming the role has been in any way deficient in carrying out her statutory duties,” adding that Mr. Trump’s termination letter “does not identify any conduct that Cook has engaged in while serving as a member of the Board that indicates that Cook lacks the competence or trustworthiness for the role.”
Mr. Trump’s move to fire Cook came amid his repeated attacks on the Federal Reserve and its chair, Jerome Powell, over the central bank’s handling of interest rates.
Cook, Powell and 10 other Fed officials sit on a committee that controls the nation’s monetary policy and sets target interest rates, with a dual mandate of keeping inflation low and employment levels high. This work is typically done independently, with little to no input from political leaders.
While the Fed did cut interest rates last year, after they had reached their highest point in decades in 2022 and 2023 in a bid to fight off inflation, the central bank has recently kept rates at relatively high levels. Powell has cited concerns that lowering rates could again lead to a swift rise in inflation and that Mr. Trump’s tariffs could also lead to an increase in consumer prices.
Jacob Rosen,
Melissa Quinn and
Joe Walsh
contributed to this report.
https://www.cbsnews.com/news/lisa-cook-firing-blocked-federal-judge/
