This development follows a federal court’s decision to temporarily block the firing of Lisa Cook as her lawsuit against her dismissal progresses.
In a move aimed at influencing the Federal Reserve’s board, the administration of President Donald Trump has petitioned an appeals court for the immediate removal of Lisa Cook from her position before the upcoming interest rate vote. This request, articulated on Thursday, represents a significant effort by the White House to reshape the board ahead of the Fed’s crucial interest rate-setting meetings scheduled for next week.
Meanwhile, Senate Republicans are advancing the nomination of Stephen Miran to fill another vacancy on the Fed’s board, which could be confirmed as early as Monday.
The Department of Justice filed a motion with the US Court of Appeals for the DC Circuit on Thursday, seeking to suspend the recent ruling from US District Judge Jia Cobb that halted Cook’s removal while the appeal moves forward.
In late August, Trump attempted to dismiss Cook, who contends that allegations of past mortgage fraud do not provide a legal basis for her termination and are merely a pretext due to her stances on monetary policy. Cobb’s ruling currently prevents the Fed from proceeding with her firing while her legal challenge is in progress.
In their urgent appeal, Trump’s legal team argued that even if the alleged actions occurred prior to her tenure as governor, they undermine her credibility as a responsible steward of the economy and interest rates.
The administration is requesting an expedited ruling from the appeals court by Monday. A favorable outcome would mean Cook’s removal from the Fed until her case is resolved, potentially excluding her from the impending meetings.
Should the appeals court side with Cook, the administration may seek intervention from the Supreme Court.
This case carries significant implications, potentially affecting the Federal Reserve’s autonomy in setting interest rates free from political influences, a cornerstone of effective central banking crucial for controlling inflation.
Recently, both the Supreme Court and lower appellate courts, including the DC Circuit, have temporarily reversed several rulings that blocked Trump’s attempts to dismiss officials from independent agencies. However, on Wednesday, the DC Circuit upheld a stay on Trump’s effort to fire the US Copyright Office director, Shira Perlmutter, during her appeal process.
Trump has consistently pressured the Fed to lower rates aggressively and has frequently criticized Fed Chair Jerome Powell for his monetary policy decisions. Since her appointment in 2022, Cook has consistently aligned with the Fed’s majority on rate decisions, including both hikes and cuts.
Preserving the Fed’s Independence
The legislation establishing the Federal Reserve stipulates that governors may only be dismissed “for cause,” though it does not define what constitutes such cause or outline removal procedures. Historically, no president has removed a Fed governor, and the legality of such actions has never been judicially contested.
In her ruling on Tuesday, Cobb emphasized the importance of maintaining the Fed’s independence from political pressure, favoring Cook’s continued presence while the legal proceedings unfold. She asserted that the most reasonable interpretation of the governing law is that a Fed governor may only be dismissed for misconduct occurring during their term. The specific allegations against Cook pertain to actions taken prior to her Senate confirmation in 2022.
Both Trump and William Pulte, the director of the Federal Housing Finance Agency appointed by Trump, have asserted that Cook misrepresented three properties on mortgage applications, which potentially enabled her to receive reduced interest rates and tax benefits.
Furthermore, the Justice Department has initiated a criminal investigation into the alleged mortgage fraud linked to Cook and has issued grand jury subpoenas from both Georgia and Michigan, as corroborated by documents and sources familiar with the situation.