Lisa Cook takes the oath of office to serve as a member of the Board of Governors at the Federal Reserve System during a ceremony at the William McChesney Martin Jr. Building of the Federal Reserve May 23, 2022 in Washington, DC.
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A federal judge on Tuesday night blocked President Donald Trump from firing Federal Reserve Governor Lisa Cook as her lawsuit challenging her termination plays out in court.
Judge Jia Cobb‘s issuance of a preliminary injunction in the case came nearly two weeks after Cook sued Trump to prevent him from becoming the first president in history to remove a Fed governor for purported cause.
Trump said on Aug. 25 that he was firing Cook because of suggestions by Federal Housing Finance Agency Director Bill Pulte that she had committed mortgage fraud in connection with documents she signed for two residential properties she owns in Georgia and Michigan. Those documents were signed before she joined the Fed.
Cook, who is the first Black woman to serve on the Fed board, denies any wrongdoing.
“The public interest in Federal Reserve independence weighs in favor of Cook’s reinstatement,” Cobb wrote in an opinion on her decision Tuesday.
“At this preliminary stage, the Court finds that Cook has made a strong showing that her purported removal was done in violation of the Federal Reserve Act’s ‘for cause’ provision.”
Cobb said that “the best reading” of that provision is that the bases for removing a Fed governor are limited to actions relating to that governor’s ‘behavior in office.’ “
” ‘For cause’ thus does not contemplate removing an individual purely for conduct that occurred before they began in office,” the judge wrote, referring to the allegations that Trump cited in seeking to fire Cook.
Cobb’s order enjoins Fed Chairman Jerome Powell and the Board of Governors “from effectuating in any manner” Cook’s removal because of Trump’s order.
Cook’s lawyer, Abbe Lowell, in a statement, said, “Today’s 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,” Lowell said.
“Governor Cook will continue to carry out her sworn duties as a Senate-confirmed Board Governor.”
The White House and the Federal Reserve did not immediately reply to requests for comment on Cobb’s order.
The Supreme Court is expected to have the final say in the case.
Trump has been critical of the Fed, Powell, and governors, including Cook, for not cutting interest rates as the president has demanded.
“I will not resign,” Cook said hours after Trump said he was firing her.
“President Trump purported to fire me ‘for cause’ when no cause exists under the law, and he has no authority to do so.”
The Federal Reserve Act says that board governors can be removed by a president only “for cause.”
Lowell, during an Aug. 29 court hearing, scoffed at the idea that Trump had legal cause to terminate her.
“You can’t have Director Pulte’s crazy midnight tweets be the cause,” Lowell told Cobb in U.S. District Court in D.C., during that hearing.
This is developing news. Check back for updates.
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