A judge has ruled that Federal Reserve governor Lisa Cook should stay in her post for the central bank's Sept. 16-17 meeting that will set interest rates, delivering a setback to President Donald Trump's effort to fire her over an allegation of mortgage fraud.
"The public interest in Federal Reserve independence weighs in favor of Cook's reinstatement," U.S. District Court Judge Jia Cobb of the District of Columbia said in her decision Tuesday night, adding, "That independence is critical" in promoting stability to the nation's banking system.
The ruling is only on the narrow question of Cook's near-term status.
Still, Cobb's decision is a step toward reducing the unusual level of uncertainty around who actually will take part in the Fed's upcoming meeting on rates.
Cook sued on Aug. 28 to block Trump's Aug. 25 attempt to fire her and to affirm that she remains an active member of the Fed's Board of Governors while her court case on her termination proceeds.
Tuesday's ruling will almost certainly be appealed by the Trump administration.
At issue in the case are the Trump administration's allegations of mortgage fraud by Cook and Trump's move to fire Cook from her post at the Fed over those claims.
Cook is asking the court to declare Trump's move to fire her "unlawful and void" and to affirm that she remains an active member of the Fed's Board of Governors.
Trump's move to oust Cook reflects a wider effort to exert more control over the Fed, an independent entity. The president has for months pressured Fed Chair Jerome Powell to lower interest rates and called for him to resign.
Cook, the first Black woman to serve on the Fed's Board of Governors, has said that Trump had "no authority" to fire her and that she would not resign. Her lawsuit against Trump charges that the president is attacking the Fed's independence and that he "concocted" a reason for firing her.
The U.S. Supreme Court recently suggested that presidents are limited in their ability to fire Fed governors, and the law that governs the Fed says members of its board can be "removed for cause by the president."
"At this preliminary stage, the court finds that Cook has made a strong showing that her purported removal was done in violation of the Federal Reserve Act's 'for cause' provision," Cobb said in her ruling. "'For cause' thus does not contemplate removing an individual purely for conduct that occurred before they began in office."
"In addition, the court finds that the removal also likely violated Cook's procedural rights under the Fifth Amendment's Due Process Clause," Cobb said. "She has also demonstrated irreparable harm from her removal. Finally, the public interest and the balance of the equities also favor Cook."
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