A federal judge ruled late Tuesday that Federal Reserve Governor Lisa Cook can remain in her position during the legal fight over President Trump’s attempt to fire her.
U.S. District Judge Jia Cobb issued a temporary restraining order that bars Ms. Cook’s removal and enjoins the Fed or its chairman, Jerome Powell, from carrying out any attempt by Mr. Trump to oust her.
Judge Cobb, a Biden appointee, said the case covers new legal ground and she wants more time to figure out all the intricacies of firing a member of the independent agency.
But she said at first blush, Mr. Trump’s reasons for removing her — questions about past homeownership practices — doesn’t meet the “for cause” standard set in the law.
“The best reading of the ‘for cause’ provision is that the bases for removal of a member of the Board of Governors are limited to grounds concerning a governor’s behavior in office and whether they have been faithfully and effectively executing their statutory duties,” she said.
That would preclude “conduct that occurred before they began in office,” she said. Judge Cobb also said Mr. Trump likely violated her due process rights in his quick dismissal of Ms. Cook.
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“This ruling recognizes and reaffirms the importance of safeguarding the independence of the Federal Reserve from illegal political interference,” said Abbe Lowell, Ms. Cook’s lawyer. “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.”
Mr. Trump could appeal the ruling as he attempts to shape the Fed to his liking.
Ms. Cook is the latest in a string of Trump firings at so-called independent agencies, which were set up by Congress to be somewhat insulated from presidential politics.
In most of the other cases Mr. Trump dismissed them without listing a cause, instead arguing a president must be allowed to have his pick of people in key positions that wield executive authority.
The Supreme Court has signaled an openness to that argument, though none of the firing cases have fully arrived before the justices.
Ms. Cook’s firing, though, was for cause.
Mr. Trump booted her on Aug. 25, based on allegations she might have committed mortgage fraud.
A federal housing finance regulator, Bill Pulte, pointed to documents showing Ms. Cook in 2021 listed properties in Michigan and Georgia as her primary residences.
Ms. Cook hasn’t fully explained why she listed both as primary residences, but in a lawsuit, she argued she never intended to commit fraud and the allegations are a pretext for Mr. Trump to stock the Fed with allies.
Ms. Cook’s removal and replacement, alongside confirmation of a pending governor nominee, would give the White House a Trump-appointed majority on the Fed board as he seeks lower interest rates from central bankers.
Mr. Trump says lower rates are warranted and would give borrowers better terms and juice the economy.
He’s railed against Mr. Powell as “too late” in making critical decisions.
The Fed is expected to cut rates by at least 25 basis points, or 0.25%, at its meeting this month due to a slowdown in hiring.
