FILE PHOTO: Lisa Cook testifies before a Senate Banking Committee hearing on her nomination to be a member of the Federal Reserve Board of Governors (for a second term), on Capitol Hill in Washington, U.S., June 21, 2023. REUTERS/Jonathan Ernst/File Photo
President Donald Trump's unprecedented firing of Federal Reserve Governor Lisa Cook just hit a snag, as a judge temporarily blocked her ouster.
Last month, Trump tried to fire Cook, citing allegations of mortgage fraud as the reason for her dismissal. Cook and her attorney immediately contested the legality of the move, insisting Trump didn't have the power to oust a Fed governor except “for cause.”
On Tuesday night, U.S. District Judge Jia Cobb dealt Trump a temporary blow in the case, finding that the Federal Reserve Act only allows a president to remove a Fed governor "for cause." Cobb noted this was the first such attempt to do so in the Fed's 111-year history.
The court ruled that Cook made a "strong showing" that her removal was done in "violation" of the "for cause" provision.
"The best reading of the 'for cause' provision is that the bases for removal of a member of the Board of Governors are limited to grounds concerning a Governor's behavior in office and whether they have been faithfully and effectively executing their statutory duties," wrote Cobb. "'For cause' thus does not contemplate removing an individual purely for conduct that occurred before they began in office."
Cobb said the removal likely violated Cook's rights to due process as well, and said she demonstrated "irreparable harm."
"Finally, the public interest and the balance of the equities also favor Cook," the judge concluded.