In a dramatic turn that could reshape the future of the United States’ central bank, a federal judge has temporarily blocked President Donald Trump from firing Federal Reserve Governor Lisa Cook. The ruling, issued late Tuesday, September 9, 2025, by U.S. District Judge Jia Cobb in Washington, D.C., has not only preserved Cook’s seat for now but has also set off a legal and political battle with far-reaching implications for the independence of the Federal Reserve.
Judge Cobb’s preliminary injunction means Cook will remain in her post while her lawsuit against the Trump administration proceeds. The decision comes at a crucial time: the Federal Reserve’s next policy meeting is set for September 16-17, 2025, with interest rates and economic policy hanging in the balance. The Trump administration had requested a delay to the ruling to allow time for an appeal, but Cobb rejected the plea, citing the public’s interest in maintaining the central bank’s autonomy. As Cobb wrote in her sharply worded opinion, "Cook is one of seven members of a Board that is, by design, not intended to be susceptible to policy pressure, let alone tasked with implementing the President’s agenda." (ABC News)
The judge’s order was prompted by Trump’s late August attempt to remove Cook, citing allegations of mortgage fraud. These claims, first amplified by Bill Pulte, director of the Federal Housing Finance Agency, and later by the Trump administration, accused Cook of falsifying bank documents and property records before her Senate confirmation in 2022. The allegations, if true, could have allowed her to obtain lower interest rates and tax credits on three properties. However, as Reuters reported, the alleged conduct occurred before Cook was even part of the Federal Reserve, a detail Judge Cobb found critical.
In her ruling, Cobb concluded that Trump’s move likely violated the Federal Reserve Act, which allows the removal of a governor only “for cause”—a term the law does not clearly define, but which Cobb interpreted as applying only to misconduct while in office. "President Trump has not stated a legally permissible cause for Cook's removal," Cobb wrote, adding that Cook had shown her removal would cause "irreparable harm" to the Fed’s independence. (ABC News)
The Trump administration quickly responded. On September 10, the Department of Justice filed a notice appealing Cobb’s ruling to the U.S. Court of Appeals for the District of Columbia Circuit. White House spokesman Kush Desai defended Trump’s actions, insisting the president had "lawfully removed" Cook for cause and that "this ruling will not be the last say on the matter." (Reuters) Trump himself declined to comment publicly on the court’s decision.
Cook, for her part, has steadfastly denied any wrongdoing. In a statement provided to ABC News, she said, "I have no intention of being bullied to step down from my position because of some questions raised in a tweet. I do intend to take any questions about my financial history seriously as a member of the Federal Reserve and so I am gathering the accurate information to answer any legitimate questions and provide the facts." In court filings, she reiterated, "I did not ever commit mortgage fraud." (Al Jazeera)
The Department of Justice has launched a criminal investigation into the mortgage fraud allegations, with grand jury subpoenas reportedly issued in Georgia and Michigan, according to Reuters. Yet, no charges have been brought against Cook, and she maintains that even if the allegations were true, they would not constitute grounds for removal since the conduct predates her tenure at the Fed.
This case marks the first time in the Federal Reserve’s 111-year history that a president has attempted to remove a sitting governor “for cause.” As Politico noted, the legal battle raises “important matters of first impression”—questions that courts have never before addressed. The stakes are enormous: the outcome could determine whether future presidents have the power to reshape the Fed for political reasons, or whether the central bank will remain insulated from the shifting winds of Washington.
Congress intentionally designed the Federal Reserve to be independent, giving its governors long, staggered terms to prevent any president from stacking the board in a single term. Cook, nominated by President Joe Biden and confirmed by the Senate in 2022, is set to serve until January 2038. She is also the first Black woman to hold a seat on the Federal Reserve Board of Governors, a historic milestone that adds another layer of significance to the case.
Judge Cobb underscored the broader implications, warning that undermining the Fed’s independence could erode public confidence in the central bank’s ability to make "sound economic decisions, free from the political pressures of an election cycle." (Politico) If markets or the public believe that monetary policy is being dictated by politics rather than data, the consequences could be severe for economic stability.
Meanwhile, the Trump administration continues to press its case, both in the courts and in the political arena. Trump has repeatedly demanded that the Federal Reserve cut interest rates aggressively, a stance at odds with the Fed’s tradition of making decisions based on economic conditions rather than political directives. The central bank, for its part, is expected to deliver a rate cut at its upcoming meeting, but economists suggest that move is more likely due to a cooling labor market than any political pressure. (Al Jazeera, Reuters)
The legal proceedings are unfolding alongside Trump’s push to fill another vacant seat on the Fed’s board. His nominee, Stephan Miran, is expected to clear the Senate Banking Committee, but it remains unclear whether he will be confirmed by the full Senate before the policy meeting.
As the case winds its way through the courts—almost certainly heading to the U.S. Supreme Court—experts say the outcome could redefine the boundaries of presidential power over independent agencies. The Supreme Court’s recent decisions have expanded presidential firing powers in some cases, but the justices have also signaled a desire to protect the Fed’s unique independence. Whether Trump’s claim of “cause” will satisfy the courts remains to be seen, but the path forward is anything but certain.
For now, Lisa Cook remains at the Federal Reserve, her future—and the institution’s independence—hanging in the balance as the nation watches a historic legal showdown unfold.
