Appeals court rejects Trump's bid to unseat Federal Reserve governor
Lisa Cook ahead of rate vote
[September 16, 2025] By
CHRISTOPHER RUGABER
WASHINGTON (AP) — An appeals court ruled Monday that Lisa Cook can
remain a Federal Reserve governor, rebuffing President Donald Trump’s
efforts to remove her just ahead of a key vote on interest rates.
The Trump administration is expected to quickly turn to the Supreme
Court in a last-ditch bid to unseat Cook. The Fed's next two-day meeting
to consider its next interest rate move begins Tuesday morning. And
Cook’s lawsuit seeking to permanently block her firing must still make
its way through the courts.
The White House campaign to unseat Cook marks an unprecedented bid to
reshape the Fed’s seven-member governing board, which was designed to be
largely independent from day-to-day politics. No president has fired a
sitting Fed governor in the agency’s 112-year history.
Separately, Senate Republicans on Monday confirmed Stephen Miran,
Trump’s nominee to an open spot on the Fed’s board. Barring any
last-minute intervention from the Supreme Court, the Fed's interest rate
setting committee will meet Tuesday and Wednesday with all seven
governors and the 12 regional bank presidents.
Twelve of those 19 officials will vote on changing the central bank's
short-term rate: All seven governors plus five regional presidents, who
vote on a rotating basis.
Chair Jerome Powell signaled in a high-profile speech last month the Fed
would likely cut its key rate at this meeting, from about 4.3% to 4.1%.
Other borrowing costs, such as mortgage rates and car loans, have
already declined in anticipation of the cut and could move lower.
Trump sought to fire Cook Aug. 25, but a federal judge ruled last week
that the removal was illegal and reinstated her to the Fed’s board.
Trump appointee Bill Pulte has accused Cook of mortgage fraud because
she appeared to claim two properties as “primary residences” in July
2021, before she joined the board. Such claims can lead to a lower
mortgage rate and smaller down payment than if one of them was declared
as a rental property or second home. Cook has denied the charges.
In a 2-1 decision, the appeals court found that Cook's due process
rights were violated because the administration did not give her a
formal opportunity to respond to the charges.
The attempt to fire Cook is seen by many legal scholars as a threat to
erode the Fed’s longtime political independence. Economists prefer
independent central banks because they can do unpopular things like
lifting interest rates to combat inflation more easily than elected
officials.
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 Many economists worry that if the
Fed falls under the control of the White House, it will keep its key
interest rate lower than justified by economic fundamentals to
satisfy Trump’s demands for cheaper borrowing. That could accelerate
inflation and could also push up longer-term interest rates, such as
those on mortgages and car loans. Investors may demand a higher
yield to own bonds to offset greater inflation in the future,
lifting borrowing costs for the U.S. government and the entire
economy.
Separately, Miran chairs the White House's Council of Economic
Advisers and said earlier this month he would take unpaid leave but
otherwise keep his job while serving on the Fed's board. It will be
the first time in decades that an executive branch official has
served at the Fed.
Miran has been appointed to finish a term that expires in January,
but he could remain in the seat if no replacement is chosen.
Cook has denied any wrongdoing and has not been charged with a
crime. According to documents obtained by The Associated Press, Cook
did specify that her Atlanta condo would be a “vacation home,”
according to a loan estimate she obtained in May 2021. And in a form
seeking a security clearance, she described it as a “2nd home.” Both
documents appear to undercut the administration’s claims of fraud.
Last week, U.S. District Court Judge Jia Cobb ruled that the
administration had not satisfied a legal requirement that Fed
governors can only be fired “for cause,” which she said was limited
to misconduct while in office. Cook did not join the Fed’s board
until 2022.
In their emergency appeal, Trump’s lawyers argued that even if the
conduct occurred before her time as governor, her alleged action
“indisputably calls into question Cook’s trustworthiness and whether
she can be a responsible steward of the interest rates and economy.”
Trump has repeatedly attacked Powell and the other members of the
Fed’s interest-rate setting committee for not cutting the short-term
interest rate they control more quickly. Trump has said he thinks it
should be as low as 1.3%, a level that no Fed official and few
economists support.
Cook is the first Black woman to serve as a Fed governor. She was a
Marshall Scholar and received degrees from Oxford University and
Spelman College, and prior to joining the board she taught at
Michigan State University and Harvard University’s Kennedy School of
Government.
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