In a landmark decision, a U.S. appeals court on Monday, September 15, 2025, refused to permit Donald Trump to dismiss Federal Reserve Governor Lisa Cook. This marks the first instance a president has attempted such an action since the Fed’s establishment in 1913, escalating a legal dispute that casts a spotlight on the central bank’s crucial independence.
This ruling by the U.S. Court of Appeals for the District of Columbia Circuit ensures that Governor Cook will retain her position at the Fed, just before its pivotal policy meeting scheduled for Tuesday and Wednesday, September 16-17, 2025. During this meeting, the Fed is widely anticipated to reduce U.S. interest rates, aiming to support a slowing labor market.
The D.C. Circuit rejected the Justice Department’s appeal to pause a lower court’s order that temporarily prevented the Republican president from removing Cook, who was appointed by former Democratic President Joe Biden. It is widely expected that the administration will challenge this decision at the U.S. Supreme Court.
The appeals court’s decision was split, 2-1, with Circuit Judges Bradley Garcia and J. Michelle Childs, both appointed by President Joe Biden, forming the majority. Circuit Judge Gregory Katsas, a Trump appointee, cast the dissenting vote.
Previously, on September 9, U.S. District Judge Jia Cobb had determined that Trump’s accusations of mortgage fraud against Cook—allegations she firmly refutes—were probably not adequate justification for her removal under the Federal Reserve Act.
The White House did not immediately provide a comment in response to inquiries.
The ‘For Cause’ Clause
When Congress established the Federal Reserve, it implemented measures designed to safeguard the central bank from political meddling. According to the Federal Reserve Act, a president can only remove a governor ‘for cause.’ However, the law doesn’t explicitly define ‘for cause’ or outline the removal process. Historically, no president has ever removed a Fed governor, and this specific legal clause has never been challenged in court until now.
Governor Cook, who holds the distinction of being the first Black woman to serve on the Fed’s board, initiated a lawsuit against Trump and the Federal Reserve in late August. She contends that the accusations made against her do not grant the president the legal authority for removal and that these claims are merely a pretext to dismiss her due to her views on monetary policy.
In contrast, the Trump administration asserts that the president possesses extensive authority to decide when a Fed governor’s removal is necessary and that such executive decisions are beyond judicial review.
This case carries significant implications for the Fed’s capacity to set interest rates independently, free from political influence. Such independence is broadly considered essential for any central bank to effectively manage critical responsibilities, like controlling inflation.
Throughout the year, Trump has consistently urged the Fed to implement aggressive rate cuts, criticizing Fed Chair Jerome Powell’s handling of monetary policy. Despite these calls, the Fed has prioritized combating inflation and has refrained from significant cuts, although a modest reduction is anticipated this week.
Earlier this year, the Supreme Court permitted Trump to move forward with removing several officials from federal agencies that Congress had designed to operate independently of direct presidential command.
However, in a May order concerning Trump’s removal of two Democratic members from federal labor boards, the Supreme Court indicated that it views the Federal Reserve as fundamentally different from other executive branch agencies. The Court described the Fed as a ‘uniquely structured, quasi-private entity’ with a distinct historical foundation.
In a court document filed on Thursday, September 11, 2025, the Trump administration had requested the D.C. Circuit expedite its decision, aiming to enable Cook’s removal before the Fed’s policy meeting on Tuesday and Wednesday, September 16-17, 2025. Lawyers for the administration contended that allowing the president to dismiss Cook would ‘strengthen, not diminish, the Federal Reserve’s integrity.’
In their counter-filing, Cook’s legal team argued that removing her prior to the meeting would destabilize U.S. and international markets. They emphasized that the public interest in maintaining her position far outweighed Trump’s attempts to assert control over the Federal Reserve.
The judge, in blocking Cook’s removal, concluded that the most accurate interpretation of the 1913 law dictates that a Fed governor can only be removed for misconduct committed during their tenure. All mortgage fraud allegations against Cook pertain to actions taken before her U.S. Senate confirmation in 2022.
Trump and his appointee, William Pulte, the director of the Federal Housing Finance Agency, have accused Cook of misrepresenting three distinct properties on mortgage applications. They suggest this could have enabled her to secure preferential interest rates and tax credits.
However, a Reuters review of a loan estimate for an Atlanta home purchased by Cook reveals she declared it as a ‘vacation home,’ a detail that seems to contradict the allegations. Furthermore, the property tax authority in Ann Arbor, Michigan, informed Reuters that Cook complied with all regulations for tax breaks on a property she designated as her primary residence.
Adding to the legal complexities, Trump’s Justice Department has reportedly launched a criminal mortgage fraud investigation into Cook, issuing grand jury subpoenas from both Georgia and Michigan, according to documents seen by Reuters and an informed source.
Stephen Miran Confirmed to Federal Reserve Board
On Monday, September 15, 2025, the U.S. Senate narrowly confirmed Stephen Miran to the Federal Reserve’s Board of Governors. This confirmation significantly bolsters President Donald Trump’s influence over the world’s most critical central bank, granting his chief economic adviser one of the twelve votes responsible for setting interest rates, just ahead of a pivotal policy meeting.
The confirmation, decided by a 48-47 vote predominantly along party lines in the Republican-controlled Senate, concluded a remarkably rapid process. This began in August with the unexpected resignation of Fed Governor Adriana Kugler, creating an immediate vacancy on the seven-member Fed board that Trump was keen to fill with an individual more inclined to endorse his year-long demand for lower interest rates.
Notably, Senator Lisa Murkowski of Alaska was the sole Republican to vote against Miran’s confirmation.
While the Senate confirmation process for a Fed governor nominee usually spans several months, Miran’s approval was expedited, taking less than six weeks.
Assuming his paperwork is finalized and he is sworn in promptly, Miran is set to participate in the U.S. central bank’s two-day policy meeting, commencing Tuesday, September 15, 2025. During this meeting, Fed policymakers are expected to endorse a quarter-percentage-point interest rate cut, a move aimed at bolstering a softening labor market.
Analysts widely predict that Miran will dissent from the upcoming policy decision, advocating for a more substantial rate cut than the one anticipated. However, it’s unlikely he will push for the multi-percentage-point reduction that President Trump has repeatedly called for.
In his role as head of the White House’s Council of Economic Advisers, Miran has consistently maintained that the Republican president’s significant import tariffs will not lead to inflation. He also argues that other presidential policies, such as the immigration crackdown, will alleviate widespread price pressures by diminishing housing demand.
As the newest addition to the Fed board, Miran’s duties will extend beyond merely voting on interest rates. Governors traditionally serve on multiple committees responsible for areas such as U.S. financial regulation and supervision, community banking, and managing staffing and budget for both the overarching U.S. central bank system and its twelve regional banks.
Miran will maintain his White House position but will take unpaid leave during his Fed tenure, which is scheduled to conclude on January 31. He could, however, remain in the role indefinitely if a replacement for his Fed seat has not been selected and confirmed by then.
Democrats have criticized this arrangement, labeling him a ‘Trump puppet’—a charge Miran vehemently denies.
During the July 29-30 meeting, two other Fed governors appointed by Trump during his first term, Michelle Bowman and Christopher Waller, dissented, advocating for an easier monetary policy. Analysts suggest that recent weaker-than-expected labor market data could lead them to dissent again in September, favoring a larger rate reduction than the quarter-percentage-point cut widely anticipated by financial markets.
A rare ‘triple dissent’ by Fed governors has not been witnessed since 1988, which was early in the tenure of former Fed Chair Alan Greenspan.