A federal judge in Washington, D.C., declined to immediately block President Donald Trump from removing Federal Reserve Board Governor Lisa Cook on Friday, leaving her fate at the central bank uncertain amid allegations of mortgage fraud, CNBC reported.
A hearing in the United States District Court for the District of Columbia ended without a ruling on Cook’s request for a temporary restraining order that would bar Trump from firing her while her lawsuit against the president proceeds.
Judge Jia Cobb said the case raises “important questions that may be of first impression, particularly as it applies to this board.”
Trump has cited allegations of mortgage fraud tied to Cook’s property dealings in Atlanta, Ann Arbor, Michigan, and Cambridge, Massachusetts, as justification for seeking her removal.
Federal Housing Finance Agency Director Bill Pulte has referred Cook to the Department of Justice twice, most recently on Thursday, for similar conduct.
Cook’s attorney, Abbe Lowell, argued that the allegations are politically motivated and do not constitute legal cause for dismissal.
“You can’t have Director Pulte’s crazy midnight tweets be the cause,” Lowell said in the hearing. He later described Pulte’s accusations as “an obvious smear campaign aimed at discrediting Gov. Cook by a political operative who has taken to social media more than 30 times in the last two days.”
The Federal Reserve Act limits a president’s authority to remove governors, allowing it only “for cause.” The Justice Department countered that it is within Trump’s discretion to determine cause.
A decision in the case could ultimately reach the Supreme Court and set a precedent for future presidents.
Fed Chair Jerome Powell, named as a co-defendant in Cook’s suit, personally asked the court to preserve the status quo and allow Cook to remain in her post while litigation unfolds. Powell and other members of the seven-seat board have resisted Trump’s push to cut interest rates, putting the central bank at odds with the White House.
If Trump succeeds in removing Cook, he will be positioned to appoint a majority of the board, a shift that could influence upcoming decisions on interest rates. Cook, who became the first Black woman to serve on the Federal Reserve Board after her 2022 nomination by President Joe Biden, holds a term expiring in January 2038.
{Trump has been battling against Chairman Powell over interest rates, saying the adamant refusal to lower interest rates is a politically motivated move to impede ecooomic progress.)
Cobb ended the hearing after two hours of arguments and asked attorneys for both sides to consider whether they wanted her to first decide on the temporary restraining order or move directly to a preliminary injunction or summary judgment. She also invited further written briefs on the matter.
The Federal Reserve told the court it would not argue the merits of Cook’s request for a temporary order but urged Cobb to issue a prompt ruling and pledged to follow any directive it issues.?
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