Fate of Fed Gov. Lisa Cook still up in the air after court hearing on Trump firing bid

Fate of Fed Gov. Lisa Cook still up in the air after court hearing on Trump firing bid
By: cnbc Posted On: August 29, 2025 View: 43

A court hearing on Federal Reserve Board Governor Lisa Cook's request that President Donald Trump be temporarily barred from firing her while her lawsuit against the president plays out ended Friday without a judge issuing a ruling.

Cook's lawyer, Abbe Lowell, at that hearing blasted the Department of Justice's argument that Trump had legal cause to remove Cook because of suggestions by Federal Housing Finance Agency Director Bill Pulte that she committed mortgage fraud in documents for two properties in Atlanta and Ann Arbor, Michigan, before joining the Fed.

"You can't have Director Pulte's crazy midnight tweets be the cause," Lowell told Judge Jia Cobb in U.S. District Court in Washington, D.C.

Pulte, who was appointed by Trump, has served as an attack dog for the president in his efforts to pressure the Fed to cut interest rates.

Cook, Fed Chair Jerome Powell and other members of the seven-seat Fed board so far have resisted that pressure.

Powell asked Cobb to keep in place the "status quo" — Cook remaining in her job — for now, until a final decision by the judge on whether Trump has grounds to fire her.

That could keep Cook on the board for its upcoming meetings on whether to hold interest rates steady or cut them.

Attorney Abbe Lowell, representing Federal Reserve Governor Lisa Cook, arrives at federal court in Washington, DC, US, on Friday, Aug. 29, 2025.
Al Drago | Bloomberg | Getty Images

A DOJ lawyer told Cobb that it is up to Trump's "discretion" to determine if he has cause to fire a Fed governor.

The Federal Reserve Act says a president can only remove a Fed governor for cause.

Cook's lawsuit against Trump challenging her removal could end with the Supreme Court determining if Trump had cause in her case, and potentially set the standard for what constitutes cause for future presidents.

Cobb said at the beginning of the hearing, "This case obviously raises some important questions that may be of first impression, particularly as it applies to this board."

If Trump succeeds in firing Cook, he would be on track to have nominated a majority the Fed board.

Cobb ended the hearing after two hours of arguments without ruling on Cook's request for a temporary restraining order that would keep her in her Senate-confirmed position indefinitely. Cook, whose term ends in January 2038, became the first Black woman to serve on the Fed board after she was nominated by then-President Joe Biden in 2022.

It is not clear when Cobb will issue a decision on Cook's request for a TRO.

The judge suggested that the attorneys for both sides confer and determine whether they want her to first rule on the restraining order request, or whether they want her to issue a decision on potential requests for a preliminary injunction or summary judgment to restrict Trump from booting her from the Fed.

Cobb also said she was giving the parties more time to supplement in writing the arguments they made in open court on Friday.

The Fed, in a court filing before the hearing, said it would not make arguments on the merits of Cook's request for a temporary restraining order.

The Elijah Barrett Prettyman US Courthouse in Washington, DC, US, on Friday, Aug. 29, 2025.
Graeme Sloan | Bloomberg | Getty Images

But the central bank also asked Cobb to issue a "prompt ruling" on her motion.

The Fed also told Cobb that it intends "to follow any order this Court issues."

The Fed Board of Governors and Powell were named as co-defendants Thursday in Cook's suit against Trump challenging the legality of his purported firing of her.

Powell and the Fed board were sued only to the extent that at some point they might execute Trump's wishes.

Trump has said he wants to fire Cook because of FHFA chief Pulte's prior allegations that she potentially committed mortgage fraud in statements she made on documents related to the properties in Atlanta and Ann Arbor.

On Thursday night, Pulte said he had filed a second criminal referral against Cook with the Department of Justice related to a mortgage for a condominium in Cambridge, Massachusetts, and alleged misrepresentations she made about that condo and the two other homes in government ethics filings during her time as a Fed governor.

Lowell on Friday called Pulte's new referral "an obvious smear campaign aimed at discrediting Gov. Cook by a political operative who has taken to social media more than 30 times in the last two days and demanded her removal before any review of the facts or evidence."

"Nothing in these vague, unsubstantiated allegations has any relevance to Gov Cook's role at the Federal Reserve, and they in no way justify her removal from the Board," Lowell said.

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