WASHINGTON: A federal judge has temporarily blocked President Donald Trump from removing Federal Reserve Governor Lisa Cook in an unprecedented legal battle that challenges central bank independence.
US District Judge Jia Cobb issued a preliminary ruling that prevents the president from firing Cook while the court considers whether allegations of pre-appointment misconduct constitute valid grounds for dismissal.
The Trump administration moved to dismiss Cook in late August based on claims she committed mortgage fraud before taking office, though she denies any wrongdoing and remains in her position.
This case will likely reach the US Supreme Court and carries significant implications for the Federal Reserve’s ability to set interest rates independently of political pressure.
President Trump has repeatedly demanded aggressive rate cuts and criticised Fed Chair Jerome Powell’s monetary policy management ahead of the September policy meeting.
The White House offered no immediate comment on the ruling, and Trump did not respond to reporters’ questions about the judicial decision.
Federal Reserve law states governors may only be removed “for cause” but provides no definition of valid causes or established removal procedures, creating legal uncertainty.
Judge Cobb stated that the “for cause” provision likely refers to a governor’s behaviour in office rather than conduct occurring before their appointment and confirmation.
Trump and Federal Housing and Finance Authority director William Pulte allege Cook inaccurately described properties on mortgage applications to secure better rates and tax benefits.
The US Justice Department has launched a criminal mortgage fraud investigation into Cook with grand jury subpoenas issued from both Georgia and Michigan.
Cook sued Trump and the Fed last week, arguing the allegations were merely a pretext to remove her due to her monetary policy stance rather than legitimate grounds for dismissal.
She became the first Black woman to serve as a Fed governor and has denied all fraud claims in court filings while maintaining any pre-office conduct wouldn’t justify removal.
The Trump administration contends the president possesses broad discretion to remove Fed governors and that courts lack authority to review such executive decisions. – Reuters