Trump Asks DC Circuit to Allow Firing of Federal Reserve Governor Lisa Cook

Trump Escalates Legal Battle: Asks DC Circuit to Allow Firing of Federal Reserve Governor Lisa Cook

In a high-stakes clash between executive power and central bank independence, the Trump administration has turned to the U.S. Court of Appeals for the D.C. Circuit. On September 12, 2025, the Justice Department filed an emergency motion asking the court to lift a lower court’s block on President Donald Trump’s attempt to fire Federal Reserve Governor Lisa Cook. The request comes just days before the Federal Open Market Committee (FOMC) meeting on September 16-17, where the Fed is widely expected to consider interest rate cuts amid cooling inflation and economic uncertainty. With Cook’s participation potentially in jeopardy, the case underscores deepening tensions over the Fed’s autonomy in Trump’s second term.

The administration’s move seeks an administrative stay to reinstate Cook’s removal, arguing that her alleged mortgage fraud constitutes “cause” under the Federal Reserve Act, regardless of when the misconduct occurred. Cook’s attorneys, however, have fired back, calling the appeal “wholly unwarranted” and warning it could disrupt the FOMC’s vote, injecting turmoil into a pivotal decision that influences everything from mortgage rates to stock market stability. As markets watch closely—long-term U.S. bonds dipped on news of the appeal—this legal showdown could redefine presidential authority over independent agencies.

Background: Trump’s Firing Order and Spark of the Dispute

The saga began on August 26, 2025, when Trump issued an executive order removing Cook from her position as one of the Fed’s seven governors. Cook, the first Black woman and the first economist to serve on the Board of Governors, was appointed by President Joe Biden in 2022 and confirmed by the Senate in a 51-47 vote. Her term was set to run until January 2028, but Trump cited “credible allegations of mortgage fraud” as grounds for her dismissal.

The allegations stem from a criminal referral by Federal Housing Finance Agency (FHFA) Director Bill Pulte, a Trump appointee, to the Justice Department. Pulte accused Cook of falsely claiming two different Michigan homes as her “principal residence” on mortgage applications between 2015 and 2017—conduct that predates her Fed tenure. The FHFA, which oversees Fannie Mae and Freddie Mac, suggested this violated federal housing laws and warranted investigation.

Cook’s legal team, led by prominent attorney Abbe David Lowell, swiftly denounced the move as baseless and politically motivated. “Governor Cook did not ever commit mortgage fraud,” they wrote in court filings, emphasizing that the referral was based on unproven claims and lacked any formal charges. Lowell argued that Trump’s action was an “unprecedented and illegal” attempt to politicize the Fed, especially amid Trump’s public criticisms of Chair Jerome Powell for not cutting rates aggressively enough to boost the economy.

The Federal Reserve Act (12 U.S.C. § 242) allows the president to remove governors only “for cause,” a standard courts have interpreted narrowly to protect the central bank’s independence from political interference. This provision, dating back to 1913, ensures the Fed can make decisions insulated from short-term electoral pressures. Trump’s order tested these limits, prompting Cook to file a lawsuit in the U.S. District Court for the District of Columbia on August 27, 2025.

The District Court’s Block: A Win for Fed Independence

Cook’s suit named Trump, the Justice Department, and even the Fed Board itself as defendants, seeking a temporary restraining order (TRO) to halt her removal. On September 9, 2025, U.S. District Judge Jia Cobb granted the TRO, issuing a preliminary injunction that reinstated Cook and barred her ouster pending a full hearing.

In a 28-page opinion, Cobb ruled that Trump’s stated cause—”mortgage fraud allegations from years before Cook’s appointment”—did not meet the legal threshold. She wrote that the “for cause” clause is limited to “a Governor’s behavior in office and whether they have been faithfully and effectively executing their statutory duties.” Pre-appointment conduct, Cobb argued, falls outside this scope, as it would undermine Senate confirmation processes and invite presidents to retroactively punish appointees.

Cobb also highlighted irreparable harm: Cook’s removal could erode public confidence in the Fed’s independence, which is “critical in helping the nation’s banking system to promote stability.” The public interest, she noted, favored keeping Cook in place, especially with the FOMC meeting looming. Fed Chair Powell, named as a co-defendant, urged the court to maintain the status quo, stating the Board would comply with any ruling.

The White House pushed back hard, with a spokesperson insisting Trump “lawfully removed Lisa Cook for cause due to credible allegations.” They requested a delay in Cobb’s order to allow an appeal, but she denied it, accelerating the case to the D.C. Circuit.

The D.C. Circuit Appeal: Trump’s Push for a Quick Reversal

The administration wasted no time appealing Cobb’s ruling to the U.S. Court of Appeals for the D.C. Circuit on September 10, 2025. Their emergency motion, filed September 12, demands an immediate stay to vacate the injunction by Monday, September 15—ensuring Cook’s firing takes effect before the FOMC convenes.

In stark language, DOJ lawyers contended that limiting “for cause” to in-office conduct is absurd. They invoked a hypothetical: “If an earlier President and earlier Senate had confirmed Bernie Madoff or Charles Ponzi to be Federal Reserve Governors, it would blink reality to suggest that a later President could not remove them based on their misdeeds, regardless of whether they occurred in office or not.” The filing argues the allegations provide ample cause, as Cook’s role involves overseeing financial institutions, making her past actions relevant to her fitness.

Cook’s team countered in a filing, urging the appeals court to deny the stay. They warned that granting it would “threaten Governor Cook’s participation in next week’s meeting and potentially plunge the FOMC’s vote into turmoil.” Lowell reiterated that no charges exist and the referral is a “smear” timed to influence Fed policy.

The D.C. Circuit, known for handling disputes over administrative law and executive power, has not yet scheduled oral arguments. A decision could come swiftly, possibly by week’s end, given the urgency. If denied, the case heads to a merits panel; if granted, Cook’s fate hangs on further appeals, potentially reaching the Supreme Court.

Who Is Lisa Cook? A Trailblazing Economist Under Fire

Lisa DeNell Cook, 62, brings a distinguished resume to the Fed. An economist specializing in economic history and innovation, she holds a Ph.D. from the University of Oxford and previously taught at Michigan State University. Before her 2022 confirmation, she advised the Biden administration on antitrust issues and served on the Treasury Department’s international advisory board.

As a governor, Cook has advocated for inclusive monetary policy, emphasizing how racial disparities affect economic outcomes. Her votes have aligned with Powell’s cautious approach to rate cuts, drawing Trump’s ire—he has repeatedly called for immediate reductions to stimulate growth. Critics, including some Republicans, see her firing as retaliation for perceived dovishness, though the administration insists it’s about integrity.

Cook’s historic role has made her a symbol of diversity at the Fed, where women and minorities remain underrepresented. Her removal could shift the Board’s composition: With two Trump-nominated governors (including recent appointee Stephen Miran) and potential Senate confirmation of another, Trump allies could control four of seven seats, amplifying influence over rates and regulations.

Broader Implications: Fed Independence, Markets, and Politics

This isn’t just a personnel dispute—it’s a litmus test for institutional norms in Trump’s second term. The Supreme Court, in a May 2025 ruling, signaled reluctance to expand presidential firing powers over the Fed, distinguishing it from other agencies like the FTC. Chief Justice John Roberts has paused similar firings elsewhere, hinting at protections for monetary policy.

Markets reacted swiftly: Bond yields rose 0.2% on September 12 as investors fretted over politicization, with the S&P 500 dipping 0.5%. Economists warn that eroding Fed credibility could spike inflation expectations or trigger volatility, echoing 1970s stagflation fears.

Politically, Democrats decry the move as an assault on democracy, with Senate Minority Leader Chuck Schumer calling it “authoritarian overreach.” Republicans, including Senate Banking Chair Tim Scott, have been quieter, though some back Trump’s push for rate cuts. Powell has remained neutral, but insiders say the Board is on edge.

If the D.C. Circuit sides with Trump, it could embolden further interventions. If not, it reinforces the Fed’s firewall. As the FOMC approaches, all eyes are on Cook’s seat—and the future of American economic governance.

Key Timeline of the Lisa Cook Firing Dispute

This fast-moving case could reach the Supreme Court by fall, with profound stakes for economic policy and separation of powers.