Lisa Cook’s fight to prevent her removal from the Federal Reserve started Friday morning in a federal court in Washington, D.C.
After more than two hours of oral arguments, the hearing between Cook's legal team and the Trump administration ended without the judge ruling on a temporary restraining order that could block Cook's firing. What happens next wasn’t immediately clear.
"This case obviously raises important questions" as it relates to the Federal Reserve Board, Judge Jia Cobb said at the start of the hearing. Cobb also noted that the Fed is a unique institution compared to other agencies.
Cook, the first Black woman to serve on the Fed's board of governors, is seeking an immediate and “emergency temporary restraining order” that would confirm her ability to continue in her role while the merits of her case are heard.
President Donald Trump moved to fire her this week, citing allegations of mortgage fraud brought by one of his political appointees. Cook hasn't been charged with any crime.
Cook's legal team highlighted that, saying there was not "any investigation or charge" before her attempted firing.
After Trump announced he was firing Cook, he said during a Cabinet meeting: "We’ll have a majority very shortly. So that’ll be great."
On Friday, Cobb said Trump "explicitly" saying he will soon secure a majority of the Fed's board made her "uncomfortable."
The court battle could shape much more than the future of Cook’s tenure at the central bank. At stake is the independence of the Federal Reserve, the world’s most important central bank, tasked with keeping inflation in check and the job market healthy.
As noted by JPMorgan chief U.S. economist Michael Feroli, Cook’s firing from the Fed, if successful, “would create the second vacancy on the board in less than a month and would allow the president to move that body in a direction more to his liking.”
“If the president were successful, the outcome would be momentous,” Feroli added.
Gaining a majority on the Fed’s board does not automatically give Trump’s central bank nominees power to raise, lower or keep interest rates unchanged, but his nominees could, as soon as February, decline to renew or confirm a fresh four-year term for regional Fed bank presidents who get a vote on interest rates.
Those presidents are key to the 12-member Federal Open Market Committee, which comprises the Fed chair, six Fed governors and five regional Fed presidents. Those presidents come from Federal Reserve banks from New York and San Francisco to Chicago and Atlanta.
Declining to confirm certain regional presidents until they are to the liking of Trump’s nominees could dramatically change the way the Fed’s rate-setting committee works.
Already, two of Trump’s nominees serve on the Fed’s board. Michelle Bowman and Christopher Waller abstained from a vote in 2023 to approve Chicago Fed President Austan Goolsbee, a former top economic adviser to President Barack Obama, to the rate-setting FOMC, according to records obtained by Bloomberg News through an open records request.
Friday’s court argument centered around allegations made by Trump’s Federal Housing Finance Authority Director Bill Pulte. He has claimed that Cook committed mortgage fraud before she became a Fed governor.
Late Thursday, Pulte said he made a "2nd criminal referral" to the Justice Department regarding Cook's mortgages. Pulte said it included "alleged misrepresentations about her properties to the United States Government during her time as Governor of the Federal Reserve."
Cook's legal team pushed back on Pulte on Friday morning.
"This is 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," they said. "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."
The Federal Reserve, in a filing, said it didn't plan to offer arguments in the case but sought a "prompt ruling" that would "remove the existing cloud of uncertainty."
The Trump administration, in turn, asked the court to deny Cook's temporary restraining order, saying she offered no defense of the charges in public or private. "Removal for 'cause' is a capacious standard, and one Congress has vested in the discretion of the President," the administration's filing said.
Cook’s broader lawsuit against the administration seeks a “declaration that President Trump’s August 25, 2025 purported firing ... is unlawful and void and that Governor Cook remains an active member of the Board of Governors of the Federal Reserve.” She also seeks a declaration from the court that “that an unsubstantiated allegation of mortgage fraud prior to a Governor’s confirmation is not cause for removal.”
Under the legislation that created the Federal Reserve, the only reason a governor can be removed from their role is “for cause,” which is generally seen as some kind of wrongdoing. Trump’s termination letter to Cook said that the administration believes she “may have made false statements on one or more mortgage applications.”
In Friday's hearing, Cook's legal team said Pulte's "crazy midnight tweets" can not be the "cause." They also said the administration did not give Cook notice to present her side of the story.
Cook’s lawyers have emphasized the use of “may” in Trump’s letter, saying the claims from Pulte are unsubstantiated.
