(Update Sept. 16: Updates the second and third paragraphs with news about a federal court’s rejection of President Trump’s appeal, and documents provided by Cook to refute the accusations of mortgage fraud.)

On Sept. 9, 2025, a week from the next anticipated meeting of the Federal Reserve Board of Governors, Judge Jia M. Cobb of the D.C. District Court issued an order reinstating Lisa Cook to her position as a voting member. As readers may recall, President Trump fired Cook, accusing her of having entered into two mortgage loan agreements identifying two different houses as her primary residence in a span of just two weeks, which is a clear violation of the law.

On Monday, Sept. 15, a federal court denied the president’s appeal to reverse Cobb’s decision, which means that Cook will be able to participate in the Federal Reserve’s interest rate meetings on Tuesday and Wednesday. On Friday, Cook provided a mortgage document to Reuters that “appears to counter other documentation that Cook’s critics have cited in support of their claims that she committed mortgage fraud by reporting two different homes as her primary residence,” according to the news agency.

Nevertheless, the president and his allies maintain that Cook did fraudulently obtain a favorable interest rate for her loans. As I pointed out in Chronicles earlier this month, if Cook is guilty of fraudulently obtaining lower interest payments, it appears to be a crime that’s still in progress, even while she fights to regain her position as a Fed board governor.

Cook is, of course, entitled to the presumption of innocence and no criminal charges have been lodged against her. But the Federal Reserve Act permits the president to fire a governor “for cause.” The president argued that a governor’s commission of mortgage fraud, or at least the appearance of that misconduct, is sufficient cause to fire her—even if the deception occurred before she assumed office. Judge Cobb’s decision took a new approach to the law which do not appear in the statute. In particular, she declared that Cook can only be fired for “grounds concerning a Governor’s behavior in office.”

I attended the oral argument in the D.C. courtroom, during which Cook’s attorney Abbe Lowell conceded that a governor could be fired for something “like robbing a bank,” even if the conduct occurred before she assumed office, particularly if the misconduct were not known at the time of her confirmation. But Judge Cobb essentially rejected even that example as grounds for a presidential dismissal. She wrote in her opinion, “The ‘for cause’ standard thus does not contemplate removing an individual purely for conduct that occurred before they assumed the position.”

But what if a Fed board member’s misconduct was first discovered while she served as governor? Not even then, according to this judge. Cobb wrote, “Why should the question of whether conduct satisfies the statute’s ‘for cause’ requirement turn on whether the conduct was known prior to confirmation?” Cobb concluded that the court did not have sufficient information to know whether Congress knew of her mortgage improprieties at the time of confirmation. She added, “In any event, it is not necessary for the Court to find this fact at this stage.” Thus, Lowell was wrong: Even if a president does discover a fed governor robbed a bank prior to assuming her role, Judge Cobb would still overturn the president’s decision to fire her because the misconduct happened before she started her position.

Judge Cobb further ruled that the decision to fire Cook was invalid because Cook didn’t have advanced notice of the charges against her. This is hard to understand in light of the fact that Cook was quoted by the BBC responding to the mortgage fraud allegations.

Cook, who was appointed by Trump’s predecessor, Democrat Joe Biden, in 2022, told the BBC in a statement that she learned of the allegations from the media and the matter stemmed from a mortgage loan application made four years ago.

“I have no intention of being bullied to step down from my position because of some questions raised in a tweet,” she said.

“I do intend to take any questions about my financial history seriously as a member of the Federal Reserve and so I am gathering the accurate information to answer any legitimate questions and provide the facts.”

The decision comes on the heels of significant data revisions to the unemployment numbers causing some to anticipate the Federal Reserve will cut the overnight rates more than the 25 basis points initially expected.

The president has criticized Federal Reserve Chairman Jerome Powell for being slow to cut interest rates and the Trump administration’s head of Crypto and AI, David Sacks, accused the Fed of taking actions that aligned with the short-term political objectives of the Biden administration while withholding similar accommodation from the Trump administration.

So what are the stakes? Many interpret fresh highs in the price of gold as a market signal that the Federal Reserve will soon succumb to pressure to lower rates and engage in more bond purchases using freshly created money. Such a move could push down long-term interest rates for mortgages and corporate borrowing.

However, many worry that such a move could also further inflate housing prices and accelerate inflation. While the president’s opponents argue that Trump is undermining the independence of the Federal Reserve, his supporters counter that the Fed has already aligned itself with the Democratic Party and that he should be entitled to interrupt that alliance by virtue of his authority as the elected chief executive.