An emergency court hearing in Washington, D.C., on Friday over President Donald Trump’s attempt to remove Federal Reserve Governor Lisa Cook ended without a ruling, leaving her status on the board unresolved.
A clash over due process and “cause”
US District Judge Jia Cobb spent more than two hours probing whether Trump had sufficient “cause” under the Federal Reserve Act to fire Cook, the first Black woman to serve on the seven-seat board. The law allows removal only for inefficiency, neglect of duty or malfeasance. Trump cited allegations of mortgage fraud tied to properties in Atlanta, Ann Arbor, and Cambridge, claims amplified by Federal Housing Finance Agency director Bill Pulte, a Trump appointee. Pulte has twice referred the matter to the Justice Department but Cook has not been charged.
Cook’s lawyer, Abbe Lowell, argued that the allegations were a political pretext and that Cook was denied basic due process. “You can’t have Director Pulte’s crazy midnight tweets be the cause,” Lowell told the court, stressing that Cook was never given formal notice or an opportunity to respond before Trump declared her fired on social media.
Justice Department lawyer Yaakov Roth countered that it was within the president’s discretion to determine cause, and that Cook’s failure to provide any public explanation of the mortgage discrepancies supported Trump’s decision. “If there was an explanation, we would have heard it by now,” Roth said.
Stakes for the Fed
The case comes amid Trump’s broader campaign to push the Fed into cutting rates. Chair Jerome Powell and the board have so far resisted. If Cook is removed, Trump would be positioned to nominate a majority of the governors, shifting control of the central bank’s policymaking body. Cook, a Biden nominee confirmed in 2022 to a term expiring in 2038, has joined Powell in resisting presidential pressure.
Cobb pressed both sides, questioning whether the courts had authority to second-guess a president’s dismissal “for cause,” but also suggesting that Trump’s reliance on untested allegations and social-media pronouncements might not satisfy due process. “You still have to serve someone. You have to give them information,” she said.
Next steps
Cobb directed both parties to file further written arguments by Tuesday before she considers whether to grant Cook’s request for a temporary restraining order keeping her on the board. She also left open the possibility of moving directly to a ruling on a preliminary injunction or summary judgment. A decision is not expected before next week, and the dispute is likely to reach the Supreme Court.
For now, Cook remains in her seat, meaning she could still participate in the Fed’s next policy meeting in mid-September, where markets expect the first interest-rate cut since December.
