An appeals court ruled late Monday that Federal Reserve Governor Lisa Cook could not be fired by President Donald Trump while his administration’s legal claims against Cook continue to play out in court.
The decision upholds a lower court decision, which ruled the Justice Department’s charges against Cook for alleged mortgage fraud likely were not sufficient grounds for removal under the 1913 law that created the Fed.
The U.S. Court of Appeals for the District of Columbia Circuit decision came less than 24 hours before the Federal Open Market Committee meeting, where Fed governors, joined by five of the 12 Federal Reserve Bank presidents, are expected to vote to cut interest rates by at least a quarter of a percent.
Biden-appointed Circuit Judges Bradley Garcia and J. Michelle Childs ruled for the majority, while Trump-appointed Circuit Judge Gregory Katsas dissented.
“In this court, the government does not dispute that it failed to provide Cook even minimal process — that is, notice of the allegation against her and a meaningful opportunity to respond — before she was purportedly removed,” Garcia wrote.
The court held Trump’s attempted firing of Cook, “likely violated the Fifth Amendment’s Due Process Clause.”
The broadside against Cook speaks to the second Trump administration’s war on the Fed, on the president’s perceived opponents in the federal government, and on sound, independent data. Here are five points to help you keep track of all that’s happened in this landmark case.
Cook caught in an attack on the Fed
To understand Trump’s ire against Cook, it’s crucial to understand his fury with the Federal Reserve in general.
During his first administration, Trump reportedly tried to fire or demote his own Federal Reserve Chair appointee Jerome Powell for raising interest rates. Since retaking office, the president had publicly urged Powell to cut the interest rate by a full percent. Trump attacked Powell during a rare presidential visit to the Fed, accusing the Fed of going over-budget on renovations, and threatened to fire Powell after the Federal Reserve Board in late June opted not to cut interest rates. In his speech at the June FOMC meeting, Powell cited, among other things, the uncertainty caused by Trump’s slapdash tariffs as one reason for holding rates.
It’s against this backdrop — of Trump not getting what he wanted politically because experts citing federal economic data were doing their jobs — that the Trump administration began haranguing Cook.
The administration’s likely next steps are to appeal to the Supreme Court, which may find itself in a precarious bind. While ruling to allow Trump to remove some officials from federal labor boards in May, SCOTUS explicitly recognized the Fed as a “uniquely structured, quasi-private entity,” distinguishing it from other agencies where Trump was granted the ability to axe staff more cavalierly.
Predatory mortgage fraud allegations as retribution
Bill Pulte, director of the Federal Housing Finance Agency and a staunch Trump ally, posted a criminal complaint on X accusing Cook of allegedly claiming two properties in Ann Arbor, Michigan and Atlanta as her primary residence in 2021. Homeowners may receive more favorable mortgage rates on residences listed as a primary residence, but not always.
Trump fired Cook within days — even before the Justice Department began investigating the administration’s claims. Cook vowed to fight back, refused to give up her seat, and sued the administration.
There’s a lot wrong with this, as TPM’s David Kurtz has highlighted in the Morning Memo. Trump’s administration has made a habit of using “bogus mortgage fraud allegations” to attack his political foes, including New York Attorney General Letitia James (D) and Sen. Adam Schiff (D-CA).
“A mere casual allegation — which we now know to have been FALSE – is nowhere near enough,” Robert C. Hockett, a Cornell law professor, told TPM via email. “Indeed the allegation here was entirely pretextual — as further evidenced by the fact that it has been made repeatedly of late only against well-known members of Trump’s Enemies List — Schiff and James, e.g.”
Adding to the illegitimacy of the administration’s actions, a ProPublica report published earlier this month found at least three Trump administration officials have mortgages for two homes in two different states listed as their primary residences. As it turns out, Pulte’s own father and stepmother do too, a Reuters investigation found. Because of that report, a Michigan town revoked the family’s tax exemption and charged Pulte’s parents for back taxes.
“What [the government is] doing is trying to use the threat of investigation as a mechanism to coerce people to comply,” Hannah Bloch-Wehba, a professor of law at Texas A&M who researches technology, privacy and democratic governance, told TPM. “It’s a way of trying to instill fear into federal workers that they might be the target of some investigation, whether it’s justified or not.
“And frankly, the concern that they might be the target of an unjustified investigation is in some ways even more chilling, because the only way to avoid that is to ensure that you don’t make anyone angry.”
Actually, Cook seems to have done everything right
The Justice Department’s pursuit of mortgage fraud claims against Cook took a nosedive Friday after documents first reported by Reuters revealed Cook actually did identify her Atlanta property as a vacation home. Officials in Georgia even told Reuters, “Cook never declared the home as a primary residence for tax purposes there,” and Cook also flagged the home as a vacation property in a 2021 federal form to obtain a security clearance.
Cook also followed lawful procedures when renting out her Michigan home, tax officials in that state said.
Despite mounting evidence to the contrary, Pulte doubled down on claims that Cook violated the law in several posts on X, at least one of which included a Shakespeare quote.
Trump’s targeting of the Fed is, of course, unprecedented
A president has never tried to remove a Federal Reserve governor in the central bank’s more than 100-year history. The Federal Reserve Act includes a clause which only allows the president to remove a Fed governor “for cause,” meaning serious wrongdoing or “malfeasance in office.” This parameter is supposed to keep the central bank independent and protect its decisions from the exact kind of political meddling Trump is attempting now.
The unprecedented case is “only a landmark thus far in the lawlessness of Trump’s attempt,” said Hockett, who specializes in monetary law, regulation and economics. “The attempt will fail, however, so in the end it will be a landmark only as symbol of a failed attempt at lawlessly ending Fed independence.”
As the administration targets Cook, Trump nominated his Council of Economic Advisers chair Stephen Miran to fill a Federal Reserve governor vacancy left by Adriana Kugler, a Biden appointee who left her seat early.
GOP senators rushed through Miran’s confirmation Monday night with a 48-47 vote that split largely along party lines, despite Miran’s intent to remain a member of the Trump administration and the unprecedented conflicts that causes.
Central banks are supposed to use data, not the opinions of elected officials, to make informed decisions about the economy. What happens when central banks are politicized? In Argentina, politicized monetary policy helped shoot the country’s inflation rate to a record high of more than 4,923% in 1989. In a less dramatic but more recent example, compromised independence within Turkey’s central banking system meant inflation reached 85% in 2022, and hovers around about 35% now.
Put into perspective, the pandemic-related inflation rates that incensed U.S. voters and allegedly lost Democrats the most recent presidential election peaked at about 9% in 2022.
It’s part of Trump’s even bigger war on information and independence
The Trump administration’s pressure campaign against the Fed is part of its much larger pattern of controlling information, said Bloch-Wehba.
“Instead of using data to determine how to govern, the administration is manipulating, ignoring and even jettisoning data altogether,” she wrote in a New York Times opinion piece.
Trump fired the BLS chief when he didn’t like the jobs report. He’s since nominated someone who, as a private citizen, operated like a MAGA hack. Upon taking office, Trump’s administration scrubbed — and has continued purging — climate science-related data, data about race in the federal workforce, and data about the intersections of sexual orientation, public health, and crime.
Federal government personnel cuts by the Elon Musk-run Department of Government Efficiency, or DOGE, gutted departments and agencies of institutional knowledge. Cuts to the education department wiped out its department responsible for collecting and distributing federal economic statistics.
“The Cook case is about using information and investigation as a weapon to align the Fed with Trump’s preferred policy choices,” Bloch-Wehba told TPM. “And when we’ve seen Trump lie before, it has usually felt like he’s doing it for his own personal or reputational gain. This is different because it’s on a much larger scale.”
