Fed governor Cook to seek court order blocking her firing by Trump

A case that could provide the Trump administration with new and expansive power over the traditionally independent Federal Reserve will get its first court hearing Friday.

Federal Reserve Governor Lisa Cook has requested an emergency injunction to block President Donald Trump’s attempt to fire her over allegations that she committed mortgage fraud when she purchased a home and condo in 2021. She was appointed to the Fed’s board by former president Joe Biden in 2022.

Early arguments in court Friday centered on what constitutes “cause,” which in this case are unproven accusations by a Trump appointee that Cook committed mortgage fraud.

In an exchange with U.S. District Judge Jia Cobb, Cook’s lawyer, Abbe David Lowell, said Trump’s motivations are clear. “He’s already said he wants a majority (on the Fed board). He’s bragged that he’s going to get it.’’

If her firing is allowed to stand, it would likely erode the Fed’s longstanding independence from day-to-day politics. No president has ever fired a Fed governor in the agency’s 112-year history. Economists broadly support Fed independence because it makes it easier for the central bank to take unpopular steps such as raising interest rates to combat inflation.

Cook has asked the court to issue an emergency order that would block Trump’s firing of her and enable her to remain on the seven-member board of governors while her lawsuit seeking to overturn the firing makes its way through the courts. Many observers expect her case will end up at the U.S. Supreme Court.

On Friday, the Justice Department responded to Cook’s suit. In a court filing the department said that “incredibly, Dr. Cook even now hazards no explanation for her conduct and points to nothing she would say or prove in any hearing that would conceivably alter the President’s determination that the perception of financial misconduct alone is intolerable in this role.’’

The department also argued that any court review of Trump’s decision to fire Cook would “have to be highly deferential, lest it intrude into the President’s constitutional authority’’ over key government officials.

And late Thursday, Bill Pulte, Trump’s appointee to the agency that oversees mortgage giants Fannie Mae and Freddie Mac, said that Cook had allegedly committed fraud on a third property, a condominium in Cambridge, Massachusetts, in April 2021.

Pulte said in a social media post that Cook classified the condo as a “second home,” but in financial disclosure documents filed in 2022 through 2025 with the government, she described it as an “investment/rental” property. Pulte added that mortgage rates and down payments for second homes can be lower than for investment properties.

Pulte also alleged, without evidence, that Cook may have rented out two properties in Ann Arbor, Mich. and Atlanta, which were the focus of a criminal referral he made last week and which he said she has claimed as her principal residence.

In a statement, Cook’s lawyer, Lowell, decried “an obvious smear campaign aimed at discrediting Gov. Cook … Nothing in these vague, unsubstantiated allegations has any relevance to Gov Cook’s role at the Federal Reserve, and they in no way justify her removal from the Board.”

The law governing the Fed says the president can’t fire a governor just because they disagree over interest rate policy. Trump has repeatedly demanded that the Fed, led by Chair Jerome Powell, reduce its key interest rate, which is currently 4.3%. Yet the Fed has kept it unchanged for the last five meetings.

But the president may be able to fire a Fed governor “for cause,” which has traditionally been interpreted to mean inefficiency, neglect of duty, or malfeasance. Cook’s lawyers argue that it also refers only to conduct while in office. They also say that she was entitled to a hearing and an opportunity to rebut the charges.

“The unsubstantiated and unproven allegation that Governor Cook ‘potentially’ erred in filling out a mortgage form prior to her Senate confirmation — does not amount to ‘cause,’” the lawsuit says.

Trump has moved to fire a number of leaders from a host of independent federal regulatory agencies, including at the National Transportation Safety Board, Surface Transportation Board, Equal Employment Opportunity Commission, and Nuclear Regulatory Commission, as well as the Fed.

The Supreme Court declined to temporarily block the president from firing directors of some independent agencies earlier this year while those cases move through the courts. Legal experts say the high court this year has shown more deference to the president’s removal powers than it has in the past.

Still, in a case in May, the Supreme Court appeared to single out the Fed as deserving of greater independence than other agencies, describing it as “a uniquely structured, quasi-private entity.” As a result, it’s harder to gauge how the Supreme Court could rule if this case lands in its lap.

As a governor, Cook votes on all the Fed’s interest rate decisions and helps oversee bank regulation. The Fed has substantial power over the economy by raising or cutting its key interest rate, which can then influence a broad range of other borrowing costs, including mortgages, car loans, and business loans.

Pulte’s charge that Cook has committed mortgage fraud is one he has also made against two of Trump’s biggest political enemies, California Democratic Sen. Adam Schiff and New York Attorney General Letitia James, who has prosecuted Trump. Pulte has ignored a similar case involving Ken Paxton, the Texas attorney general who is friendly with Trump and is running for Senate in his state’s Republican primary.

Cook’s lawsuit responds by arguing that the claims are just a pretext “in order to effectuate her prompt removal and vacate a seat for President Trump to fill and forward his agenda to undermine the independence of the Federal Reserve.”

If Trump can replace Cook, he may be able to gain a 4-3 majority on the Fed’s governing board. Trump appointed two board members during his first term and has nominated a key White House economic adviser, Stephen Miran, to replace Adriana Kugler, another Fed governor who stepped down unexpectedly Aug. 1. Trump has said he will only appoint people to the Fed who will support lower rates.

Christopher Rugaber And Paul Wiseman, The Associated Press