Chicago – September 16, 2025
A federal appeals court blocked former President Donald Trump’s attempt to remove Federal Reserve Governor Lisa Cook from her position, marking an unprecedented legal ruling in the 112-year history of the central bank.
The court’s 2-1 decision followed Trump’s August announcement to dismiss Cook based on unproven mortgage fraud allegations, which she denies. The ruling allows Cook to remain on the Federal Reserve board while her legal challenge to the removal proceeds.
The court emphasized that Cook was denied due process, including the right to respond before the dismissal. Judges noted the Federal Reserve Act permits firing governors only “for cause,” but the law does not clearly define what constitutes cause, a key issue pending judicial interpretation. This decision preserves the Fed’s political independence ahead of a critical policy meeting where interest rate cuts are anticipated to support a cooling labor market.
The Trump administration signaled plans to appeal to the Supreme Court, escalating the legal battle with significant implications for the Fed’s autonomy in setting monetary policy free from political interference. Cook’s continuation on the board marks a significant defense of that independence.
