A federal judge likely will not rule until next week on whether Lisa Cook, a member of the Federal Reserve board, can remain in her job despite President Donald Trump’s attempt to fire her.
At the first hearing on Cook’s lawsuit against Trump, U.S. District Judge Jia Cobb grappled with the legal issues raised by Trump’s unprecedented move against Cook but offered few hints about how she might rule. The judge, an appointee of Joe Biden, acknowledged the limits of the courts’ power to question the president’s motives, while expressing concerns about the lack of due process afforded to Cook.
The case, which appears destined for the Supreme Court, could affect markets and resolve whether the Fed will remain free from presidential control.
Cook is seeking an immediate restraining order that would keep her in her position on the Fed’s Board of Governors while the litigation moves forward.
During a two-hour hearing in federal court in Washington, Cobb gave Cook’s lawyers until Tuesday morning to respond to a legal brief the Justice Department filed shortly before the hearing. She is unlikely to rule on the restraining order before then.
In the meantime, Cook and the entire Fed will remain in limbo. Attorneys for the interest rate-setting body appeared at the hearing but took no position on Trump’s effort to fire Cook. They urged Cobb to make a quick decision to end the uncertainty now gripping the board. Trump has made no secret of his desire to be rid of the board’s chair, Jerome Powell, as well and may take cues from the outcome of the legal fight over Cook’s position.
Cobb seemed receptive to arguments by Cook and her attorney Abbe Lowell that Trump fired her over “mere allegations” that she falsely claimed in mortgage applications to have more than one primary residence. Those claims have not resulted in any legal or investigative finding of misconduct or any criminal charge.
Federal law allows the president to remove Fed board members “for cause,” a term generally understood to mean serious misconduct. Trump cited the mortgage allegations as his cause to fire Cook, but Lowell said that was merely a pretext to hide Trump’s desire to influence monetary policy.
Lowell hammered on the fact that Trump had repeatedly broadcast his intention to remake the Fed board to support his drive for lower interest rates — even on the eve of his decision to fire Cook.
“Let’s take him at his word. ‘For cause,’ for the president, means she won’t go along with an interest rate drop,” Lowell said.
Cobb seemed most troubled by the fact that Cook has never been directly informed of the allegations against her and that she was not given a chance to rebut the mortgage allegations before Trump decided to fire her. The judge also seemed highly dubious of the Trump administration’s arguments that social media posts by the president amounted to sufficient notice under the law.
But Cobb also struggled with courts’ long-standing reluctance to second-guess presidential determinations, particularly when the law gives discretion to the chief executive. The Federal Reserve Act provides no guidance about what the phrase “for cause” means or what level of “cause” can justify a firing.
“That sounds to me like the epitome of a discretionary determination, and that’s when the president’s power is at its apex,” said Yaakov Roth, the Justice Department attorney arguing on Trump’s behalf.
Roth argued that the courts have no role in enforcing the firing-only-for-cause requirement and that the language is so broad it can encompass almost any justification, except for a mere policy disagreement.
“It’s very open-ended,” he said.
Cobb said it’s well established that elected officials are not legally entitled to due process before being stripped of their posts, while government employees clearly have such rights.
“This doesn’t seem to fit neatly in either category,” the judge said. “I guess if I had to say what it’s closer to, I would put it closer to an employee than an elected official."
Lowell noted that courts have generally found that government employees have a “property interest” in their jobs that can’t be taken away without being informed of the reason and having a chance to respond.
Cook did not become aware of the allegations against her until housing finance regulator Bill Pulte, the person who had referred the matter to the Justice Department, announced them in a post on X. Pulte argued she may have committed criminal mortgage fraud by classifying two properties, purchased in 2021, as her primary residence in loan applications. Trump announced that he was removing her for cause five days later.
Roth repeatedly noted that Cook still hasn’t offered a detailed rebuttal to the allegations, which he said undercuts the notion that giving her a formal opportunity to respond would have any real impact on the situation.
“They need to show what is the fact in dispute that they would’ve contested had they been given the chance,” Roth said.
Lowell hinted at such an explanation during the hearing, without firmly committing to it.
“What was the mortgage fraud? Was it the possibility that when she applied to the mortgage, she was moving from one primary residence to a second primary residence?” he said.
Cook acquired a 15-year, $203,000 mortgage for a property in Ann Arbor, Michigan, on June 18, 2021, with the commitment to use the home as her primary residence for at least a year. Then, two weeks later, she bought a condo in Atlanta and took out a 30-year, $520,000 mortgage on it, also affirming that it would serve as her primary residence for a year.
Earlier in 2021, she also bought a condo in Cambridge, Massachusetts. Pulte alleged Thursday evening that her application for that property was also misleading.
Cook was nominated by Biden in January 2022 to a seat on the Fed’s board for a term that expired in two years. She was confirmed by the Senate in May 2022 on a 50-50 tie vote, after receiving the backing of Vice President Kamala Harris. Cook was reconfirmed the next year to a full 14-year term that started in 2024.
At one point during the court hearing Friday, Roth conceded that allegations raised during a candidate’s confirmation process would likely not be sufficient to amount to the cause needed under the law to remove someone years later.
Lowell seized on that, saying he planned to submit evidence to the court that Cook’s mortgage filings were submitted to the Senate at the time of her nomination.
Lowell also highlighted the fact that Roth himself, on behalf of the Justice Department, had argued in other personnel-related cases that the central bank is a “unique” institution that requires more insulation than some of the other federal entities Trump has attempted to remake unilaterally.
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