Judge Blocks Trump From Firing Fed Gov. Lisa Cook Ahead of Interest Rate Meeting

A federal judge has temporarily blocked President Donald Trump's attempt to fire Lisa Cook from the Federal Reserve Board of Governors over allegations of mortgage fraud.

In an order late Tuesday, DC District Judge Judge Jia M. Cobb granted Cook's request for a preliminary injunction blocking Fed Chair Jerome Powell or other Fed officials from carrying out Trump's order to remove Cook as a Fed policymaker.

Cobb in a memorandum wrote that she finds Cook "substantially likely" to succeed in her argument that Trump violated the Federal Reserve Act, because her purported removal did not comply with the law's requirement that Fed governors can only be removed "for cause."

The White House says it plans to swiftly appeal the ruling, potentially derailing Cook's ability to participate in next week's crucial interest rate meeting, where a rate cut is now widely expected.

The president announced Cook's removal after Trump-appointed housing regulator Bill Pulte took to social media to accuse Cook of lying on a mortgage application by listing two separate properties, purchased weeks apart, as her primary residence. 

Cook, who has not been charged in the matter, in her lawsuit argued that allegations made on social media were not sufficient cause to remove her from the Board of Governors. She also argued that Trump did not allow her to respond to the claims, violating her constitutional right to due process.

Trump's attempt to remove Cook follows the president's pressure campaign on the Fed to dramatically cut interest rates, which would juice the economy and reduce government borrowing costs.

Cook, a Biden appointee, is one of the 12 policymakers on the Federal Open Market Committee who set the Fed's interest rate. At the last FOMC meeting, she joined the majority in supporting Powell in holding rates steady.

Citing fears of lingering inflation, the Fed has held its rate steady at a range of 4.25% to 4.5% since December. But following a series of weak job reports, the FOMC is expected to issue a rate cut when it meets on Sept. 17.

Mortgage rates have fallen in anticipation of the cut, reaching an 11-month low of 6.5% last week, according to Freddie Mac. While the Fed does not set mortgage rates, those rates move in anticipation of future Fed policy and financial conditions.