Thankfully, a federal judge has intervened with a temporary restraining order. This order stops President Donald Trump from being able to directly fire Federal Reserve Governor Lisa Cook. This ruling comes as Cook finds herself still fighting the massive wrongful termination lawsuit in court that Cook was fired for filing. She is the first Fed board member to face an unprecedented removal undertaking by a sitting president.
In a rare move, President Trump has openly lambasted the Federal Reserve. He made no secret of his hostility toward its governors, Cook among them, for not lowering interest rates to his liking. On August 25, he publicly announced his intention to fire Cook. This decision came after accusations from Bill Pulte, the Federal Housing Finance Agency Director, that claimed Cook was engaging in mortgage fraud. Under the Federal Reserve Act, a president can only remove board members “for cause.” This surprising limitation has a major effect on the legality of Trump’s actions.
When Cook took her oath of office on May 23, 2022, she made history as the first Black woman to serve on the Fed board. In the wake of news of her indictment, she has publicly denied any wrongdoing. Her attorney, Abbe Lowell, has insisted from the start that Cook will not resign and given further details in dismissing the premise of Trump’s claims as groundless.
“President Trump purported to fire me ‘for cause’ when no cause exists under the law, and he has no authority to do so.” – Lisa Cook
The landmark free speech lawsuit that launched when Cook sued Trump. This occurred almost two weeks before Judge Jia Cobb made her final ruling. The judge’s decision underscores the importance of protecting the Federal Reserve’s independence from political interference.
Lowell expressed satisfaction with the ruling, stating, “Today’s ruling recognizes and reaffirms the importance of safeguarding the independence of the Federal Reserve from illegal political interference.” He argued passionately that if we let Trump push Cook out, we’d be putting our financial stability at risk. It would further attack the rule of law by making baseless, ambiguous accusations.
In the backdrop of this legal clash, Trump faces other significant challenges, including a major defamation judgment in the E. Jean Carroll case and potential tariff refunds exceeding $1 trillion if deemed illegal by the Supreme Court. What’s more, a sustained debate over the economic fallout of the Biden administration’s Inflation Reduction Act has kept up the heat.
Whatever happens with this unfolding drama, Lisa Cook is still a trailblazer as the first Black woman to serve on the Fed board. Her case represents an inflection point for the independence of federal institutions. It has important ramifications on the political direction of how we make policy impacts on the economic governance.