A federal judge has blocked President Donald Trump from firing Federal Reserve Governor Lisa Cook while courts consider Cook’s lawsuit to stop Trump’s move.
U.S. District Judge Jia Cobb late Tuesday night granted Cook’s motion for a temporary restraining order as a motion for a preliminary injunction, which will halt Trump’s action until the court decides the case.
“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 wrote in her opinion in the U.S. District Court for the District of Columbia.
The Department of Justice filed a notice Wednesday that Trump will appeal Cobb’s decision to the U.S. Court of Appeals for the District of Columbia.
Trump attempted to remove Cook from her seat in August, alleging mortgage fraud and citing his authority under Article II of the Constitution and the Federal Reserve Act.
In her suit, Cook said Trump had denied her due process and threatened the Fed’s independence while trying to gain control of its board. She also filed for an emergency temporary restraining order.
A court hearing in late August focused on whether Trump has an appropriate reason for dismissing Cook. The Fed statute says Fed officials can be removed “for cause” but doesn’t define cause.
“The best reading of the ‘for cause’ provision is that the bases for removal of a member of the Board of Governors are limited to grounds concerning a Governor’s behavior in office and whether they have been faithfully and effectively executing their statutory duties,” Cobb wrote. “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 Trump’s actions and Cook’s legal challenge “raise many questions of first impression that the court believes will benefit from further briefing on a non-emergency timeline.”
Trump moved to fire Cook while he is pressuring Fed Chair Jerome Powell to lower interest rates. The Federal Open Market Committee, on which Cook and other governors sit, is scheduled to meet next week to make a decision on rates.
Abbe Lowell, Cook’s attorney, said Cook’s decision helps shield the Fed from White House influence.
“This ruling recognizes and reaffirms the importance of safeguarding the independence of the Federal Reserve from illegal political interference,” Lowell, founder of Lowell and Associates, said in a statement. “Allowing the President to unlawfully remove Governor Cook on unsubstantiated and vague allegations would endanger the stability of our financial system and undermine the rule of law. Cook will continue to carry out her sworn duties as a Senate-confirmed Board Governor.”
While Cook battles Trump in court, a new member could soon join the Fed. The Senate Banking Committee is scheduled to vote Wednesday on the nomination of Stephen Miran to fill the remainder of the term of former Fed Governor Adriana Kugler, who resigned from her seat early.
In a committee hearing last week, Democrats criticized Miran for saying he will keep his job as chairman of the Council of Economic Advisers if he is confirmed to the Fed board.
Miran said he has been advised by counsel to take a leave of absence from the council.
Democrats said that remaining employed in the White House would compromise his independence.
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