Banking and Finance Law Daily Wrap Up, FEDERAL RESERVE SYSTEM—D.D.C.: District court enjoins Trump’s attempt to remove Fed Governor Cook, (Sep 10, 2025)

By Shashi Kant, BALLB, LLM.

The court found that Trump’s action exceeded statutory authority, violated due process, and threatens the Fed’s independence pending further litigation.

A federal district court has preliminarily blocked President Donald Trump’s attempt to remove Federal Reserve Board Governor Lisa D. Cook. In a Sept. 9, 2025, memorandum opinion and order, Judge Jia M. Cobb concluded that the President’s action likely violated the Federal Reserve Act’s “for cause” requirement and Cook’s due process rights. Judge Cobb held that the statute’s protection limits removal to a Governor’s in-office conduct and performance of statutory duties and does not extend to alleged pre-tenure misconduct. The court also determined that Cook was entitled to notice and an opportunity to respond before removal. The accompanying order enjoins Chair Jerome Powell and the Board of Governors from treating Cook as removed or obstructing her access to office resources while the litigation proceeds (Cook v. Trump, No. 1:25-cv-02903-JMC (D.D.C. Sept. 9, 2025)).

Statutory framework, Fed independence. The Federal Reserve Act establishes the Board of Governors as an independent component of the central bank, with seven members serving staggered fourteen-year terms. The Act provides that Governors may be removed only “for cause” by the President. Judge Cobb emphasized that Congress designed this structure to insulate monetary policy from political influence by granting the Board independent funding, exemption from certain oversight mechanisms, and direct authority to present legislative testimony. The opinion noted that the Federal Open Market Committee, of which Governors are members, meets regularly to determine open market operations and interest rate targets.

Cook’s appointment and referral letter. Court filings state that President Biden first appointed Cook in 2022 to fill an unexpired term and later nominated her to a full fourteen-year term, which the Senate confirmed in September 2023. On August 15, 2025, Federal Housing Finance Agency (FHFA) Director William Pulte referred Cook to the Department of Justice, alleging that she misrepresented her primary residence in two 2021 mortgage transactions, before her appointment. Pulte publicized the referral on August 20, 2025. That same day, President Trump demanded Cook’s resignation on social media and later told reporters he would fire her if she did not resign.

President Trump’s removal letter. On Aug. 25, 2025, President Trump posted a letter declaring Cook removed from the Board “effective immediately,” citing the FHFA referral and asserting that she had signed inconsistent mortgage agreements. The President characterized this as deceitful and as undermining public confidence in the Fed. Cook stated in her complaint that she received no prior notice of the letter before it was published online. Her six-count complaint, filed Aug. 28, 2025, alleges violations of the Federal Reserve Act and the Fifth Amendment and seeks declaratory and injunctive relief.

Claims and legal standards. Cook’s complaint asserts that the Federal Reserve Act’s “for cause” clause requires grounds relating to a Governor’s conduct in office, such as inefficiency, neglect of duty, or malfeasance, and does not permit removal for alleged conduct predating confirmation. She further claims that removal without notice or hearing violated both statutory and constitutional due process protections. In support of her motion for a temporary restraining order, Cook argued that the removal caused irreparable harm by obstructing her ability to carry out Senate-confirmed responsibilities and threatened the independence of the central bank (Banking and Finance Law Daily, Aug. 28, 2025).

Court’s analysis of “for cause”. Judge Cobb reviewed the statutory history and context of the Federal Reserve Act. The opinion stated that Congress modeled removal protections for Governors after similar provisions for independent agencies, where “for cause” traditionally referred to in-office conduct demonstrating inefficiency, neglect of duty, or malfeasance. The court concluded that extending “for cause” to pre-appointment conduct would undermine the Senate confirmation process and permit removals inconsistent with congressional design. Judge Cobb emphasized that the President’s stated basis, alleged mortgage irregularities in 2021, occurred before Cook’s appointment and therefore did not satisfy the statutory standard.

Due process considerations. The court also held that Cook has a property interest in her fourteen-year term and could not be deprived of that interest without notice and an opportunity to respond. Because she learned of her removal only through the President’s public posting, Judge Cobb found a likely violation of the Fifth Amendment’s Due Process Clause.

Equitable factors. Judge Cobb further concluded that Cook faced irreparable harm absent relief, since loss of her statutory office could not be remedied after the fact. The court determined that preserving her role would not substantially injure other parties and that the public interest favored maintaining the independence of the Fed pending full adjudication.

Preliminary injunction and next steps. Construing Cook’s request for a temporary restraining order as a motion for a preliminary injunction, the court granted relief and barred the Board from effectuating the removal. The order specifies that Cook must continue to be treated as a Governor with access to the benefits and resources of her office. Judge Cobb noted that the ruling is appealable under 28 U.S.C. § 1292(a)(1).

The Case is No. 1:25-cv-02903-JMC.

Judge: Cobb, J.

Attorneys: David A. Kolansky (Lowell & Associates, PLLC) for Lisa D. Cook. Christopher R. Hall, U.S. Department of Justice, for Donald J. Trump, Board of Governors of the Federal Reserve System and Jerome H. Powell.

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