On Tuesday evening, a federal judge in the United States ruled that during the ongoing litigation, President Trump is not allowed to dismiss Federal Reserve Board Member Lisa Cook. The ruling ensures her continued tenure and participation in the policy meeting scheduled for September 16.
The case revolves around whether the president has the authority to dismiss Federal Reserve officials “for cause,” a precedent unprecedented in American history.
At the core of the case is whether the president has the right to dismiss a Federal Reserve Board member “for cause.” Judge Jia Cobb pointed out that the best interpretation of “for cause” is limited to the behavior or performance of the board member during their tenure, excluding actions before taking office. This means that Trump’s allegations against Cook for mortgage fraud during a property purchase in 2021 cannot serve as grounds for dismissal.
This marks the first attempt by a U.S. president to dismiss a Federal Reserve Board member, a decision likely to be ultimately determined by the Supreme Court.
In her ruling, Judge Cobb emphasized that the Trump administration failed to present a valid basis for dismissal. She wrote, “President Trump has not identified any of Cook’s actions or job performance during her time on the board to prove that she acted disloyally or ineffectively, damaging the board or public interest.”
She also noted, “The public interest lies in maintaining the independence of the Federal Reserve, which tends to support Cook’s reinstatement.”
Cobb added, “At this preliminary stage, the court finds that Cook has strongly demonstrated that her dismissal allegedly violates the ‘for cause’ provision of the Federal Reserve Act.”
On August 25, Trump announced Cook’s dismissal, accusing her of mortgage fraud during a 2021 property purchase and citing Bill Pulte, Director of the Federal Housing Finance Agency, as justification.
White House spokesperson Kush Desai stated on Tuesday, “President Trump lawfully dismissed Cook from her extremely sensitive position based on credible allegations of mortgage fraud.”
Desai said, “This ruling is not final, and the Trump administration will continue to work towards restoring accountability and confidence in the Federal Reserve.”
Cook denied any wrongdoing and pointed out that the relevant documents were signed before she took office at the Federal Reserve.
Her lawyer Abbe Lowell stated, “Today’s ruling recognizes and reaffirms the importance of protecting the Federal Reserve from illegal political interference.”
He emphasized, “Allowing the president to illegally dismiss Director Cook based on unfounded and vague accusations would jeopardize the stability of our financial system and undermine the rule of law.”
This lawsuit highlights the longstanding tension between Trump and the Federal Reserve. Trump has criticized Fed Chair Jerome Powell for not cutting interest rates in a timely manner, and at one point earlier this year, he frequently hinted at the possibility of firing Powell.
In recent months, Trump has continued to pressure the Federal Reserve, insisting that tariff policies will not cause long-term inflation and urging the central bank to cut rates quickly. However, Fed officials prefer to observe the impact of trade wars and other major policy changes on the U.S. economy before deciding whether to cut rates again.
If Cook is ultimately dismissed, Trump would be able to nominate her successor, meaning that of the seven Federal Reserve Board members, a majority would be appointed by him.
During a recent cabinet meeting, Trump said, “We’ll soon have a majority, which is great. Once we have a majority, the housing market will turn around, which will be fantastic.”
Meanwhile, the Senate Banking Committee is expected to vote on Trump’s nominee Stephen Miran to replace Adriana Kugler, who abruptly resigned in August. If confirmed, this would further increase the number of board members inclined towards Trump’s policies.
Starting on September 16, members of the Federal Reserve Board will convene for a two-day policy meeting, with market expectations widely anticipating the first rate cut since December of last year.