Judge slaps down Trump’s attempt to fire Federal Reserve governor Lisa Cook in shock ruling for central bank

XEM CHI TIẾTA Biden-appointed judge ruled that Federal Reserve Governor Lisa Cook is allowed to stay on the job while Donald Trump continues his effort to oust her on shaky legal authority.

U.S. District Judge Jia Cobb late Tuesday granted Cook’s request for a preliminary injunction blocking her firing while the dispute makes its way through the courts.

Cobb ruled that Cook would likely prevail in the lawsuit she filed late last month to overturn her firing.

The ruling, which will likely be appealed, is a blow to the Trump administration´s efforts to assert more control over the traditionally independent Fed, which sets short-term interest rates to achieve its congressionally mandated goals of stable prices and maximum employment.

Congress has also sought to insulate the Fed from day-to-day politics.

Trump said he was firing Cook on August 25 over allegations raised by one of his appointees that she committed mortgage fraud related to two properties she purchased in 2021, before she joined the Fed.

Attorney General Pam Bondi’s Justice Department issued subpoenas last week into the allegations.

Cook is accused of saying two properties were ‘primary residences,’ which could have resulted in lower down payments and mortgage rates than if either was designated a second home or investment property.

A Biden-appointed judge ruled that under fire Federal Reserve Governor Lisa Cook (pictured) is allowed to remain on the job while Donald Trump continues to try to fire her

Trump said he was firing Cook on August 25 over allegations raised by one of his appointees that she committed mortgage fraud related to two properties she purchased in 2021, before she joined the Fed

Cobb ruled that the allegations likely weren’t sufficient legal cause to fire her. Under the law governing the Fed, governors can only be removed ‘for cause,’ which Cobb said was limited to actions taken during a governor’s time in office.

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,’ Cobb wrote.

‘President Trump has not stated a legally permissible cause for Cook´s removal,’ the ruling added.

The decision means Cook will be able to participate in the Fed’s Sept. 16-17 meeting, when it is expected to reduce its key short-term rate by a quarter-point to between four percent and 4.25 percent.

Federal Reserve governors aren’t like cabinet secretaries and the law doesn’t allow a president to fire them over policy disagreements or because he simply wants to replace them.

Congress sought to insulate the Fed from political pressure, the court noted, by giving Fed governors long, staggered terms that make it unlikely a president can appoint a majority of the board in a single term.

‘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,’ Cook´s lawyer, Abbe Lowell, said in a written statement.

‘Governor Cook will continue to carry out her sworn duties as a Senate-confirmed Board Governor.’

U.S. District Judge Jia Cobb (pictured) late Tuesday granted Cook’s request for a preliminary injunction blocking her firing while the dispute makes its way through the courts

The president has repeatedly attacked the Fed´s chair, Jerome Powell (pictured left), for not cutting its short-term interest rate, giving him the nickname ‘Too Late’ and even threatened to fire him

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 pendency of this litigation.’

The president used the allegations against Cook to fire her via a post to Truth Social.

‘In light of your deceitful and potentially criminal conduct in a financial matter… I do not have such confidence in your integrity,’ Trump wrote.

Bill Pulte, a Trump appointee to the agency that regulates mortgage giants Fannie Mae and Freddie Mac, made the accusations official in August.

Pulte alleges that Cook had claimed two primary residences — in Ann Arbor, Michigan and Atlanta — in 2021 to get better mortgage terms.

The regulator also posted a part of his letter to Bondi, saying his agency had obtained Cook’s mortgage documents, and citing the two loans from June and July 2021.

‘She needs to quit because what she did is grounds for firing,’ he wrote in a separate post.

Attorney General Pam Bondi’s (pictured left) Justice Department issued subpoenas into the allegations against Cool

The announcement came days after Cook said she wouldn’t leave her post despite Trump previously calling for her to resign. The Fed’s board has seven members, meaning Trump’s move could have deep economic and political ramifications.

Cook is the first Black woman to serve as a governor. She was a Marshall Scholar and received degrees from Oxford University and Spelman College, and prior to joining the board she taught at Michigan State University and Harvard University´s Kennedy School of Government.

Trump has been pushing Powell to cut the central bank’s short-term interest rate. Firing Cook will clear the path for Trump to appoint a MAGA acolyte who can help him assert control over the institution.

So far, Powell has argued that rates should stay high because inflation hasn’t come down to the 2 percent target. As consumer prices remain high, he’s kept Fed interest at 4.5 percent since December 2024.

Powell recently signaled that the central bank was leaning toward cutting its rate at its meeting next week.

President Trump has openly disagreed with the decision, calling for as much as a three percent cut.

Lower rates make it cheaper for businesses to borrow money but crucially it also cuts borrowing costs for ordinary Americans, who then have more to spend on goods and services. A higher rate can cool consumer pricing.

Trump’s decision to fire Cook is an escalation. For months, the President has been trying to cut against the Fed’s independence.

Trump has been pushing Powell to cut the central bank’s short-term interest rate. Firing Cook will clear the path for Trump to appoint a MAGA acolyte who can help him assert control over the institution

Normally, the Fed has protected itself against political pressure as it tries to maintain low inflation and high job growth across the US.

But the Fed is in a tricky spot, given recent economic analysis.

Forcing Cook off the Fed´s governing board provides Trump an opportunity to appoint a loyalist.

Trump has said he would only appoint officials who would support cutting rates.

The president said in announcing the move that he had the constitutional authority to remove Cook, but doing so will raise questions about control of the Fed as an independent entity.

No president has sought to fire a Fed governor before. Economists prefer independent central banks because they can do unpopular things like lifting interest rates to combat inflation more easily than elected officials.

If Trump can replace Cook, he may be able to gain a 4-3 majority on the Fed´s governing board.