Judge Rules Fed Governor Can Remain in Role, for Now

A federal judge late Tuesday temporarily blocked President Trump from removing Lisa Cook from the Federal Reserve’s Board of Governors, allowing her to continue serving as she contests her recent dismissal.

The decision dealt a blow to Mr. Trump, who had tried to fire Ms. Cook over allegations that she had falsified documents related to her mortgages, even though she had not been charged or convicted of a crime. Lawyers for Ms. Cook have framed her attempted ouster as politically motivated, citing the president’s desire to appoint loyalists to the Fed who will cut interest rates as he desires.

The decision from Judge Jia M. Cobb of the U.S. District Court for the District of Columbia marked only the first salvo in what is likely to be a lengthy legal battle over the president’s ability to remove a Fed official “for cause,” a term generally understood to mean professional neglect or wrongdoing.

In her ruling, Judge Cobb said Mr. Trump’s justifications for removing Ms. Cook did not meet the threshold for sufficient cause, in part because the action in question took place before her tenure as a Fed governor began. Ms. Cook signed her mortgage documents in 2021, roughly a year before she joined the Fed after being appointed by President Joseph R. Biden Jr.

“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,” she said. “‘For cause’ thus does not contemplate removing an individual purely for conduct that occurred before they began in office.”

Lawyers at the Justice Department argued in their first hearing that the president had expansive powers to determine what constitutes cause and that the court should be “highly deferential” to that interpretation.