President Donald Trump’s attempted firing of Federal Reserve Governor Lisa Cook has been blocked by a federal judge, who says that the removal would violate “the Federal Reserve Act’s ‘for cause’ provision.”
In the decision, the judge penned that, “permissible cause for removal of a Federal Reserve Governor extends only to concerns about the Board member’s ability to effectively and faithfully execute their statutory duties” in office. However, the attempted firing raises “many serious questions of first impression” that should be further examined.
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The block deals a setback to the Trump administrations efforts to help pack the Federal Reserve Board; part of a larger effort to reduce interest rates, an effort that the President has taken an interest in since starting his second term. Rate cuts have been seen as a crucial ingredient in bolstering a sagging U.S. economy, with Treasury Secretary Scott Bessent saying Tuesday that high interest rates are “choking off growth.”
Trump and his Republican allies have already complained ad nauseam about the Fed’s ‘wait and see approach’, accusing members like Chairman Jerome Powell of being “too slow” in cutting interest rates. Trump officials had even flirted with firing Powell, citing rising costs for renovating the Fed bank’s various buildings.
They’ve taken a similar angle of attack in attempting to fire Cook, with Federal Housing Finance Agency Director Scott Pulte alleging that Cook lied on a mortgage application by marking both of her homes as primary residencies. A ProPublica report found that three members of Trump’s cabinet had also marked two homes as primary residencies; none of which have been referred by Pulte for criminal investigation as Cook has been.
To that end, it remains to be seen how the President or administration might respond to the court’s decision. There have been no formal charges brought in the matter and few public findings, but the court decision would insulate the Fed Governor Cook as it stands, regardless of any proceedings. The Trump Administration might choose to appeal the decision, much as they have appealed other controversial policy decisions, such as the President’s tariffs.
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But for now, the blocking of Cook’s firing might inspire greater confidence on Wall Street, where worries about Fed Independence have been hitting a fever pitch.
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