A federal court hearing in Washington, D.C., concluded without a ruling on President Donald Trump’s attempt to fire Federal Reserve Governor Lisa Cook, leaving her status on the central bank’s Board of Governors unchanged for now.
U.S. District Judge Jia Cobb, after two hours of oral arguments, requested additional written arguments from Cook’s legal team by Tuesday to clarify why Trump’s action is unlawful.
The case, which may reach the U.S. Supreme Court, could redefine the Federal Reserve’s independence, a cornerstone of its ability to set monetary policy free from political influence.
Cook’s lawsuit, filed Thursday, challenges Trump’s claim that alleged mortgage fraud in 2021 justifies her removal, arguing it lacks legal grounding under the Federal Reserve Act, which permits dismissals only “for cause.”
Judge Cobb questioned the Justice Department’s assertion that courts cannot review a president’s “for cause” decision, stating, “Deferential doesn’t mean that there’s no probing of it.”
She also expressed concern over due process, noting, “You still have to serve someone. You have to give them information,” as Trump announced Cook’s firing via a social media letter without direct notification.
Cook’s attorney, Abbe Lowell, argued the fraud allegations are a pretext to replace her with someone aligned with Trump’s push for lower interest rates, saying, “Cause for the president means she won’t go along with the interest rate drop.”
Trump’s move to oust Cook, the first Black woman on the Fed’s board, marks the first attempt by a president to fire a Fed governor, raising alarms about the central bank’s autonomy.
The Federal Reserve has stated it will abide by any court decision, with Cook still listed as an active member of its committees.
Trump’s ongoing pressure campaign, including criticism of Fed Chair Jerome Powell and the bank’s $2.5 billion renovation project, underscores his aim to reshape the Fed’s seven-member board, where a Cook removal would allow him to appoint a fourth member.
With the Fed expected to cut rates at its September 16-17 meeting, the outcome of this case could influence global markets, as evidenced by the U.S. dollar’s dip following Trump’s announcement.