Judge Hears Arguments on Trump Bid to Oust Fed's Lisa Cook

A federal judge in Washington heard arguments Friday on whether President Donald Trump can remove Federal Reserve Governor Lisa Cook from the central bank’s board, a case that could redefine the balance of power between the White House and the traditionally independent Fed.

Cook, who was appointed by President Joe Biden in 2022, is seeking an emergency injunction to block her dismissal. Trump moved to oust her after Bill Pulte, a Trump appointee to the agency that oversees mortgage giants Fannie Mae and Freddie Mac, accused her of mortgage fraud related to property purchases in 2021. Cook has denied the allegations and her lawyers contend they are politically motivated.

During the hearing, Cook’s attorney, Abbe David Lowell, argued that the president has no authority to remove a Fed governor over unproven claims. He said Trump’s real motivation is political, pointing to public comments where the president has boasted of his desire to gain a majority on the seven-member board. The Justice Department countered that Cook has not explained discrepancies in her mortgage documents and therefore has left the accusations unanswered.

Pulte has alleged that Cook misclassified a Cambridge, Massachusetts, condominium as a “second home” rather than an investment property, and has raised questions about two additional properties in Michigan and Georgia. He has not presented evidence to support the claims. Lowell dismissed the accusations as “an obvious smear campaign” designed to clear the way for Trump to fill her seat.

The case comes at a sensitive moment for the central bank. No president has ever removed a Fed governor in the institution’s 112-year history. The law allows removal only “for cause,” a term traditionally interpreted as inefficiency, neglect of duty, or malfeasance. Cook’s attorneys argue the allegations, even if true, fall far short of that standard and should not threaten her position. Economists warn that allowing the dismissal to stand could undermine the Fed’s independence, which has long been considered essential to setting monetary policy free from political pressure.

The central bank’s benchmark interest rate currently stands in a range of 5.25% to 5.50% and has been unchanged through five consecutive meetings. Trump has repeatedly pressed for cuts, while Fed Chair Jerome Powell and the board have resisted, citing inflation risks. Presidents from both parties have often clashed with the Fed, but direct attempts to remove governors are unprecedented.

Trump has also sought to replace leaders at several other independent agencies, part of a wider push to expand presidential control. The Supreme Court has recently shown greater deference to such removal powers, though in a decision earlier this year it described the Fed as “a uniquely structured, quasi-private entity,” signaling it may treat the central bank differently from other agencies.

If Cook is removed, Trump could gain a 4–3 majority on the Fed’s board. He has already nominated White House economic adviser Stephen Miran to fill another recently vacated seat and has said he will appoint only officials who favor lower interest rates.

This report contains material from The Associated Press.