Appeals Court Says Lisa Cook Can Remain on Fed Board

The decision came the day before the Federal Reserve begins a two-day meeting at which policymakers are expected to cut interest rates.

A federal appeals court on Monday denied a last-minute attempt by President Trump to fire Lisa Cook, a Federal Reserve governor, and prevent her from participating in a crucial two-day Fed meeting to set interest rates.

As a result, Ms. Cook will be able to cast a vote at the gathering, which begins on Tuesday.

The ruling marked the second legal defeat for Mr. Trump in his quest to oust Ms. Cook, whom he has accused of engaging in mortgage fraud. Ms. Cook has not been charged with a crime. Mr. Trump has moved to stack the central bank with a roster of political loyalists, and separately on Monday, he secured confirmation of one of his top advisers to another open slot on the Fed’s board of governors.

The decision from the U.S. Court of Appeals for the District of Columbia Circuit upheld the work of a lower judge, who temporarily blocked Mr. Trump earlier this month from firing Ms. Cook while the two sides war over the legality of her potential dismissal. If Mr. Trump had prevailed, Ms. Cook’s lawyers warned, it could have rattled financial markets and plunged the politically independent central bank into uncharted waters.

The ruling was supported by two of the three appellate judges, who flagged the risks associated with removing Ms. Cook, given that she had continued to serve in her role despite the president’s attempted firing.

“Granting the government’s request for emergency relief would thus upend, not preserve, the status quo,” the judges wrote. “A stay would itself introduce the possibility of ‘the disruptive effect of the repeated removal and reinstatement’ of Cook during this litigation.”

Part of Ms. Cook’s defense was that she was also denied adequate time to respond to the allegations before Mr. Trump tried to remove her, an argument the judges suggested had a “strong likelihood of success.”

The White House did not immediately respond to a request for comment.

Mr. Trump and his top deputies have claimed that Ms. Cook falsified records to obtain favorable mortgage terms before her arrival at the Fed. But Ms. Cook, who has been neither charged with nor convicted of a crime, sued on grounds that her dismissal was unlawful under the Fed’s chartering statute.

The law allows the president to only dismiss officials at the Fed for cause, typically defined as professional neglect or malfeasance. A judge on the U.S. District Court for the District of Columbia ruled earlier this month that Mr. Trump had not met that standard, and could not oust Ms. Cook for conduct that occurred unrelated to her duties and before she was confirmed by the Senate in 2022.

A preliminary loan estimate reviewed by The New York Times suggests that Ms. Cook did not try to deceive lenders about one of the properties, a home in Atlanta, that she purchased before joining the country’s central bank in 2022. Those documents complicate the administration’s claim that Ms. Cook sought to commit fraud and undermines their stated reason for removing her from her role.

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