Lisa Cook Lawsuit: Firing, Oral Arguments, and Fed Independence

The Lisa Cook lawsuit is Trump v. Cook (No. 25A312), the Supreme Court case testing whether President Donald Trump can fire Federal Reserve Governor Lisa Cook over mortgage allegations that predate her time on the Board. Oral arguments were held on January 21, 2026, and as of mid-2026 no ruling has been issued. A preliminary injunction from the district court is still in effect, so Cook continues to serve as a Fed governor while the justices decide.¹ Fed Chair Jerome Powell has called it “perhaps the most important legal case in the Fed’s 113-year history.”²

Cook was confirmed to the Federal Reserve Board of Governors in 2022 and sworn in again in September 2023 for a full fourteen-year term ending January 31, 2038.³ The lawsuit began when the president tried to cut that term short.

Why Trump Tried to Fire Her

The trigger was a criminal referral from Bill Pulte, director of the Federal Housing Finance Agency, sent to the Justice Department during the week of August 18, 2025. Pulte alleged that Cook had committed mortgage fraud by designating two properties, one in Ann Arbor, Michigan, and one in Atlanta, as her “primary residence” on mortgage applications filed within a two-week span in 2021, before she joined the Fed. The claim was that this let her obtain lower interest rates reserved for primary homes.⁴

The referral itself was unusual. Pulte made it personally rather than routing it through the FHFA’s Office of Inspector General, the body that ordinarily investigates mortgage fraud, and former officials described the move as “bizarre.”⁵ A congressional letter from Representative Jamie Raskin noted that Pulte posted about Cook’s case more than 30 times on social media in the day after announcing the investigation and appeared on Fox News twice to discuss it.⁶ Pulte had made similar referrals against Senator Adam Schiff and New York Attorney General Letitia James.⁴

On August 25, 2025, Trump announced on social media that he was dismissing Cook, citing the mortgage allegations as evidence of “gross negligence in financial transactions that calls into question her competence and trustworthiness as a financial regulator.” A formal firing letter followed five days later.⁷ Cook was given no advance notice of the allegations before the public announcement and no opportunity to respond.⁸

What Cook Says About the Mortgages

Cook and her attorney, Abbe Lowell, have denied the fraud allegations. They characterized the Atlanta mortgage entry listing the condo as a primary residence as an “inadvertent” and “isolated notation,” pointing to other loan documents for the same property that correctly identified it as a vacation home. Cook’s annual financial disclosures had consistently listed the Atlanta condo as a “personal residence,” distinct from primary, and her main home remained in Ann Arbor.⁹ Cook has never been charged with a crime.¹⁰

How the Lower Courts Ruled

Cook filed suit in the U.S. District Court for the District of Columbia, and the court treated her request for a temporary restraining order as a motion for a preliminary injunction.¹¹

On September 9, 2025, Judge Jia Cobb blocked the removal on two independent grounds. She held that the Federal Reserve Act’s “for cause” removal provision is limited to a governor’s behavior in office and to whether the governor is faithfully executing statutory duties; because the mortgage applications predated Cook’s time on the Board, they could not satisfy that standard. She rejected the government’s argument that “cause” covers any articulable reason other than a policy disagreement, noting that when the 1935 Banking Act was drafted, “for cause” was a legal term of art with a narrower meaning than the broader “reasons” standard used elsewhere in the same statute. As a separate ground, Judge Cobb found that Cook had likely been denied due process under the Fifth Amendment because she received no notice and no chance to respond before the firing.⁸

The administration sought a stay. On September 15, 2025, the U.S. Court of Appeals for the D.C. Circuit denied it 2-1. Judges Bradley Garcia and J. Michelle Childs agreed Cook was likely to succeed on her due process claim, with Garcia’s concurrence reasoning that the “for cause” protection gives her a constitutionally protected property interest in her position and that the government did not dispute that it failed to provide even minimal process. Judge Gregory Katsas dissented, arguing Cook does not hold a protected property interest in a government office and that pre-appointment mortgage fraud could qualify as valid cause because it goes to competence and trustworthiness.¹²

What the Supreme Court Is Deciding

The Trump administration filed an emergency application with the Supreme Court on September 18, 2025.¹ Rather than acting on the stay, the Court on October 1, 2025, deferred the matter in an unsigned order and set the case for oral argument in January 2026. The practical effect was that Cook stayed in her seat.¹³

The justices are being asked to resolve several intertwined questions:

What “for cause” means. The Federal Reserve Act says governors serve fourteen-year terms “unless sooner removed for cause by the President” but never defines the phrase. The administration says it covers serious misconduct including pre-office conduct; Cook says it is limited to performance in office.¹⁴
Whether a court can review the president’s finding of cause. The administration argues the determination is not subject to judicial review. Cook and amici, including the U.S. Chamber of Commerce, argue that without review the “for cause” protection is meaningless.¹⁵
Whether a governor is entitled to notice and a hearing before removal. The administration says no such right exists because the statute does not explicitly require it. Cook argues those protections are implicit in a “for cause” standard.¹⁶
Whether courts can reinstate a removed official. The administration argues remedies should be limited to back pay.¹⁷

How Oral Arguments Went

Solicitor General D. John Sauer argued for the administration. Paul Clement of Clement & Murphy represented Cook.¹⁸

Several justices sounded skeptical of the administration. Justice Kavanaugh asked Sauer, “What’s the fear of more process here?” and warned that unfettered removal power could “weaken, if not shatter, the independence of the Federal Reserve,” cautioning that “once these tools are unleashed,” they would “be used by both sides.” Chief Justice Roberts and Justice Kagan pressed Sauer on whether the “for cause” requirement would be rendered “non-effectual” without judicial review.¹⁶ Justice Barrett raised the concern that removing a Fed governor this way could “trigger a recession.”¹⁹

Clement argued Congress deliberately tied the president’s hands to keep short-term politics away from interest rates. Congress, he said, “political animals, one and all, knew better than anyone that the short-term temptations to lower interest rates and have easy money was a disaster in the long term. And so they tied their own hands by taking the Fed out of the appropriations process, and they tied the president’s hands.”²⁰ If the Court wanted to sort out the mortgage facts, he urged the justices to send the case back to the lower courts and keep Cook in her seat while that happened.¹⁸

Reporters covering the argument said a majority appeared inclined to block the removal and remand for further fact-finding.²¹

Why the Case Matters Beyond Cook

The lawsuit is a direct test of Federal Reserve independence. Cook, after attending the January 21 argument in person, said in a statement: “My case is about whether the Federal Reserve will set key interest rates guided by evidence and independent judgment or will succumb to political pressure.”²¹

The case also sits alongside earlier signals from the Court about the Fed’s status. In Trump v. Wilcox, decided in May 2025, the majority stayed lower court orders that had blocked the removal of members of the National Labor Relations Board and the Merit Systems Protection Board, finding those agencies exercise “considerable executive power.” The opinion carved out the Fed, describing it as “a uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States.”²² Both sides in Cook’s case have leaned on that language. Justice Kagan, dissenting in Wilcox, criticized the majority’s Fed characterization as coming “out of the blue.”²³

A companion case, Trump v. Slaughter (No. 25-332), tests whether statutory removal protections for FTC commissioners violate the separation of powers and whether the 90-year-old Humphrey’s Executor precedent should be overruled. It was argued in December 2025 and also remains undecided.²⁴

The American Bar Association’s analysis warned that a ruling favoring the president could grant the executive “sweeping authority” to remove governors by citing alleged prior conduct, exposing monetary policy to political pressure of a kind that has no parallel among advanced economies.¹⁷

Where the Case Stands Now

The Supreme Court has not ruled. Judge Cobb’s preliminary injunction remains in effect, so Cook is still serving on the Board of Governors.¹ A decision is expected by summer 2026.¹⁶ Whatever the justices decide is likely to set the standard for what counts as “cause” to remove a Fed governor, whether that determination gets any judicial check, and whether a governor is entitled to notice and a hearing before being fired.

1
U.S. Supreme Court. Docket for 25A312
2
Politico. Powell: Lisa Cook Lawsuit Is the Most Important Legal Case in the Fed’s History
3
Board of Governors of the Federal Reserve System. Lisa D. Cook
4
CNN. Bill Pulte Lisa Cook Federal Reserve Mortgage
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The Guardian. Bill Pulte FHFA Referral Mortgage Fraud Lisa Cook
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House Judiciary Committee Democrats. Raskin to Pulte FHFA Re Mortgage Fraud
7
SCOTUSblog. Trump v. Cook: An Explainer
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Courthouse News Service. Judge Cobb Lisa Cook Trump Firing Blocked Preliminary Injunction Opinion
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The Guardian. Lisa Cook Fraud Case Defense
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The New York Times. Lisa Cook Mortgage Fraud Accusation
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Economic Policy Institute. Firing Federal Reserve Governor Lisa Cook
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U.S. Supreme Court. Trump v. Cook Appendix
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WTTW News. Rare Denial: Trump Supreme Court Lets Lisa Cook Remain Federal Reserve Governor for Now
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Board of Governors of the Federal Reserve System. Section 10 of the Federal Reserve Act
15
U.S. Chamber of Commerce. Trump v. Cook
16
SCOTUSblog. Supreme Court Appears Inclined to Prevent Trump From Firing Fed Governor
17
American Bar Association. Trump v. Cook
18
Bloomberg Law. Paul Clement’s Cook Argument Is a Master Class in Oral Advocacy
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UC Davis Law Review. Online Dorf (II)
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News From the States. Even Conservative Supreme Court Justices Cool Trump Dismissal Fed’s Lisa Cook
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The New York Times. Supreme Court Fed Lisa Cook
22
U.S. Supreme Court. Trump v. Wilcox, No. 24A966
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SCOTUSblog. The Supreme Court and Whether the Fed Is Special
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SCOTUSblog. Trump v. Slaughter