A federal appeals court has rejected an emergency bid from President Trump’s administration to remove Federal Reserve Governor Lisa Cook, leaving her in place as the central bank prepares for a pivotal policy meeting.
In a 2–1 decision issued Monday, the U.S. Court of Appeals for the D.C. Circuit declined to clear the way for President Trump to dismiss Cook, who has been accused of mortgage fraud but denies any wrongdoing. The ruling preserves a lower court injunction that reinstated Cook to her post, ensuring her participation in the Fed’s two-day interest rate–setting meeting beginning Tuesday.
The Trump administration is expected to ask the Supreme Court to intervene. Without an urgent order from the high court, however, Cook remains one of the seven sitting governors who shape the central bank’s monetary policy.
Judges Split Over Due Process and Presidential Authority
Judge Bradley Garcia, joined by Judge Michelle Childs, wrote that Cook is likely to prevail in her argument that the president’s effort to remove her violated her due process rights. Garcia noted that Cook had not been given adequate notice or an opportunity to respond to the allegations before being targeted for dismissal.
“Given that Cook has a property interest in her position, she is entitled to ‘some kind’ of process before removal,” Garcia stated. He warned that granting the administration’s request to immediately oust her would “upend” the current status quo. Judge Gregory Katsas dissented.
The Justice Department argued that Cook’s alleged misstatements on mortgage forms constituted sufficient “cause” for removal under the Federal Reserve Act. Administration lawyers further contended that the president’s authority to act on such grounds is discretionary and beyond judicial review.
Legal and Political Stakes for the Federal Reserve
The dispute centers on the Federal Reserve Act’s provision that governors may be removed only “for cause,” a term not explicitly defined. U.S. District Judge Jia Cobb earlier ruled that President Trump lacked grounds to dismiss Cook because the allegations stem from events prior to her time in office. Cobb concluded that the Act requires misconduct to occur during a governor’s tenure to justify removal.
Cook, who was appointed by President Joe Biden, has filed a lawsuit asserting that the firing attempt was politically motivated, tied to her policy stance on interest rates rather than any legitimate misconduct. Her attorneys described the administration’s allegations as a “thinly-veiled pretext” to expand presidential influence over the central bank.
If Cook were ultimately removed and replaced, President Trump would hold a majority of appointees on the Fed’s Board of Governors, a shift that could significantly reshape U.S. monetary policy. Critics warn that such an outcome would erode the independence of the central bank, long considered vital to market stability.
Next Steps For Trump Administration and Broader Implications
The Justice Department has signaled it may escalate the case to the Supreme Court. While the Court has previously allowed presidents to remove officials at other independent agencies, it has recognized the Federal Reserve as a unique institution with a distinct constitutional role.
Cook’s case is being closely watched by economists, lawmakers, and investors. The Fed is widely expected to announce a rate cut this week, but questions over the stability of its leadership loom large.
Her 14-year term runs through 2038, meaning the outcome of this legal battle could have lasting implications for the balance of power between the White House and the central bank.
