Court puts on hold Trump's attempt to fire one of the Fed governors. What does that mean?

A US federal court has temporarily blocked Donald Trump's attempt to fire Lisa Cook, a member of the Federal Reserve Board of Governors. The judge recognized the "public interest" in preserving the regulator's independence and ruled that firing Cook was against the law. This came shortly after another court ruled Trump's imposed duties illegal, the return of which could cost the budget hundreds of billions of dollars.

A US federal court has suspended President Donald Trump's decision to fire Lisa Cook, the first black woman on the Board of Governors of the Federal Reserve System. This follows from the ruling published on the court's website. Judge Gia Cobb found that the President's actions violate the law on the Fed and threaten the independence of the regulator.

"In addition, the public interest in maintaining the independence of the Federal Reserve speaks in favor of restoring Cook. That independence is key to ensuring that "the nation's banking system can provide stability," the paper said.

The judge said the dismissal violates the "good cause" provision of the Fed's resignation provision. She said the president can only demand resignation for misconduct committed while serving on the board, not for actions that occurred before taking office, CNBC reported.

Trump was referring to allegations of mortgage fraud allegedly related to Cook signing deeds to properties she owned. Those documents were executed prior to her appointment to the council. Cook denies all allegations.

The court's decision will allow Lisa Cook to attend the Fed's Sept. 16-17 meeting, which is expected to discuss interest rate cuts, CNBC noted. This is the first time in history that a president has attempted to fire a member of the Board of Governors "for cause." If the resignation had taken place, Trump would have had the opportunity to appoint her successor and gain a majority on the Board, CNBC noted.

Cook's lawyer Abbe Lowell said the decision reaffirms the importance of protecting the Fed's independence, CNBC reported. He said the president's attempt to remove Cook based on unsubstantiated and vague allegations would have jeopardized the stability of the financial system and undermined the rule of law. White House spokesman Kush Desai, on the other hand, emphasized that Trump acted lawfully and will continue to fight for "accountability and trust in the Fed."

The attempted firing of Lisa Cook fits into Trump's tactic of pressuring the Fed and its chairman Jerome Powell to ease monetary policy, according to CNBC. The Supreme Court will now have to make the final decision in the case.

The federal court's decision in Cook v. Trump was a new case in which a judge went against the president's policies. On Aug. 29, an appeals court ruled that the "Emancipation Day" fees Trump announced in April were illegal. After that, Treasury Secretary Scott Bessent warned that in case of a final decision of the Supreme Court, the government will have to return hundreds of billions of dollars to business - and in the worst scenario up to $1 trillion, writes CNBC. Against this backdrop, the conflict over the Fed only makes markets more nervous and calls into question the institutional stability of the U.S. economy.

This article was AI-translated and verified by a human editor