Why a lower court delaying the decision could make it harder to remove Cook before FOMC meeting
Just a little over a week away from the Federal Reserve making its latest rate decision, the makeup of the Federal Open Market Committee (FOMC) that will make that decision is still up in the air. And that could impact not just whether the Fed can cut rates, but how large a rate cut it approves.
One piece of the puzzle could be settled this week, when the Senate Banking Committee votes to potentially confirm Stephen Miran to the current open seat on the board. However, the Trump administration is waiting for a court ruling to determine whether they can remove Lisa Cook as Fed governor on accusations of mortgage fraud.
If Cook is removed, it would allow the administration to move Miran to her term and appoint another Fed governor. This could lead to the Fed taking a more aggressive stance toward rate cuts.
However, the question remains when the federal district court will rule on the Cook lawsuit to stay on the Fed board, and what they will decide. Kenneth Katkin (pictured top), law professor at Northern Kentucky University’s Chase College of Law, believes they may wait until right before the FOMC meets next week.
“I have to believe that the federal district court is going to have to decide one way or the other fairly soon on Cook's request for a temporary restraining order,” Katkin told Mortgage Professional America. “But the court may wait until a day or two before the mid-September Fed meeting for all kinds of reasons.”
Appeals are likely
Katkin said that one reason for the extra time is that the issue of Cook remaining on the board doesn’t really need to be decided until right before she takes an official action of the board, which would be at next week’s FOMC meeting.
Also, since whichever side loses this decision will undoubtedly appeal, it gives the judge more time to prepare a more reasoned opinion.
“That extra time gives the district judge more time to write a better and more reasoned opinion, because obviously it's going to get appealed by both sides,” Katkin said. “No matter what the district judge decides, whether he gives the temporary restraining order, whether he denies the temporary restraining order, the losing party is going to immediately appeal to the US Court of Appeals for the DC Circuit. Then that losing party is going to immediately appeal to the US Supreme Court.”
In addition to those reasons, Katkin believes there is a strategy in waiting, because the longer the federal district court waits, the less time available to potentially appeal all the way to the Supreme Court before the Fed vote.
“The closer he times it to the mid-September Fed meeting, the more it's probably only going to have time to be appealed to the DC circuit, and not all the way to the Supreme Court,” he said. “Every day that the district court doesn't do anything, it's less likely that that could be done.”
Signaling a decision
The fact that there has been a delay in making an initial ruling at the federal district court is likely a telling sign as to what they will decide, Katkin said.
“This is just my opinion, but I do think it signals which way,” he said. “I think just about any federal district judge that's trying to follow currently existing law is going to have to rule in Cook's favor. I do think this judge will rule in Cook's favor, and I think the US Court of Appeals will rule in Cook's favor.
“You never know what's going to happen at the Supreme Court, because they're allowed to change the currently existing law, and they tend to rule in Trump's favor. So, I think those are the political dynamics of it.”
Katkin cites three questions that must be answered, in conjunction with the statute of the Federal Reserve that affords governors protection.
“We basically have three fundamental legal questions tied up in this,” he said. “One, you've got a statute. The statute gives some civil service protection to the governors of the Federal Reserve Bank, although it does allow them to be fired for cause. It comes down to three questions. One question would be, what constitutes cause? One question would be, what kind of due process has to be complied with if cause is alleged.
“Finally, one question that I think is going to end up being the most important one would be, if there's no cause, does the President still have a constitutional authority to fire someone contrary to the language of the statute? And I think that's where most of the action is going to be in this case.”
Federal Reserve governor Lisa Cook's legal battle against president Donald Trump’s attempt to remove her from office has set up a potential Supreme Court case that could determine the central bank’s independence. https://t.co/pwTMHh2IXf
— Mortgage Professional America Magazine (@MPAMagazineUS) September 3, 2025
One other issue that Katkin notes is that typically, when someone is removed in this manner, there is recourse to apply for reinstatement. However, because the Fed would likely replace a fired governor quickly, he feels like a hearing might have to precede termination instead of being part of a reinstatement process.
“To what kind of process is due?” he said. “The answer is, generally, the person who wants to fire the civil servant for cause first, even before there can be any kind of firing, has to give notice of the charges and an opportunity to be heard to the person who is being fired. Now that can be fairly informal. That doesn't have to be a court proceeding or anything like that.
“But there also has to be a right for a full-blown judicial trial afterwards, after the removal for reinstatement. I don't know that reinstatement would be a possibility, because someone else might be put into that position. If reinstatement afterwards wouldn't be a possibility, then there probably would have to be more due process right up front, like that whole full-blown court proceeding, at least some kind of full-blown administrative hearing.”
Stay updated with the freshest mortgage news. Get exclusive interviews, breaking news, and industry events in your inbox, and always be the first to know by subscribing to our FREE daily newsletter.
