Federal Judge Blocks Fed Governor’s Removal

A federal judge issued a preliminary injunction preventing the removal of Lisa Cook as Federal Reserve Governor.

The Court's Order requires Fed Chair Jerome Powell and the Board of Governors to allow Governor Cook to remain a member of the Board and continue performing her duties while the litigation is pending. The Court found that President Trump’s attempt to oust her from the position likely violated the Federal Reserve Act and her due process rights.

In the Memorandum Opinion, the U.S. District Court for the District of Columbia noted this was the first attempted "for cause" removal of a Governor in the central bank’s history, and that the Federal Reserve Act’s removal protections are designed to preserve the independence of the central bank. Ms. Cook challenged the firing as inconsistent with the Federal Reserve Act, arguing the mortgage fraud allegations against her predated her service on the Federal Reserve Board and failed the statute’s narrow "for cause" standard. She argued that removal violated statutory and constitutional due process protections. (See related coverage.)

The Court held that Ms. Cook was likely to succeed on the merits of her claims, finding that the Federal Reserve Act’s "for cause" standard applies only to in-office conduct and not to alleged misconduct before appointment. The Court further found that Ms. Cook has a protected property interest in her fixed-term position and was denied due process because she received no meaningful notice or opportunity to respond. The Court determined that her removal would cause irreparable harm by preventing her from performing her duties and by undermining the Federal Reserve’s independence, with the balance of equities and public interest weighing in her favor.

The Court converted Ms. Cook's request for a temporary restraining order into a preliminary injunction and granted it, allowing her to remain in office while litigation proceeds.