Washington, D.C. — In a significant legal decision on Monday, a federal appeals court turned down the Trump administration’s appeal to allow the president to fire Lisa Cook from her role on the Federal Reserve Board of Governors. The ruling keeps a previous lower court’s order intact that reinstated Cook to her position.
The U.S. Court of Appeals for the D.C. Circuit split 2-1 as it denied the urgent relief request from Trump’s team, ensuring that Cook can continue in her role as a Fed governor through the upcoming two-day meeting of the interest rate-setting committee starting Tuesday.
Last month, Mr. Trump had sought to oust Cook due to accusations of mortgage fraud, which she has firmly denied.
In a supporting opinion, Judge Bradley Garcia, joined by Judge Michelle Childs, expressed that Cook likely has a strong case that Trump’s move infringed on her due process rights. Judge Gregory Katsas, however, disagreed.
Garcia emphasized, “Since Cook has a stake in her job, she deserves some sort of process before being fired.” He pointed out that the government did not offer Cook any meaningful notice or chance to defend herself against the claims. Even if they argue a hearing wouldn’t change things, it doesn’t negate her right to a proper process.
Granting the emergency removal request would disturb the ongoing situation since Cook has continued her duties despite Trump’s claimed termination.
A spokesperson for the Justice Department stated that they cannot comment on ongoing litigation matters.
The Trump administration’s request for this emergency relief came following a ruling from U.S. District Judge Jia Cobb, who indicated that firing Cook likely breached not only the Federal Reserve Act but also her due process protections.
The Federal Reserve Act lays out that a Fed governor can only be removed “for cause,” which, according to Cobb, refers to conduct while in the position. As Cook’s alleged infractions dated back to before her Fed tenure, Cobb determined Trump lacked justifiable cause for her dismissal.
Judge Cobb issued a preliminary injunction that allows Cook to remain on the Board of Governors while legal proceedings take place.
The judge remarked, “President Trump’s justification for dismissal is centered solely on allegations of Cook’s behavior from before her time on the Federal Reserve Board,” asserting that these allegations do not legally qualify as ’cause’.
Trump has consistently criticized the Fed for particularly slow interest rate cuts, though analysts anticipate a cut announcement might be forthcoming. Should his challenge successfully remove Cook and lead to a new appointee, Trump would have appointed the majority of the Fed Board.
Restating on social media, Mr. Trump declared last month that he was firing Cook, an appointee of the previous administration, and claimed he had sufficient justifications for her removal. Cook’s term on the Fed Board extends until January 2038.
The president’s grounds revolved around accusations that Cook provided false information on mortgage documents, assertions raised by Bill Pulte, leader of the Federal Housing Finance Agency, who contended that Cook misrepresented her principal residence to secure better mortgage terms. Pulte’s accusations remain unproven, and Cook has yet to face any formal charges.
Cook’s legal team clarified in court filings that while she might have made an error on a mortgage application as a private citizen prior to her Fed role, there was no fraudulent intent involved.
Reuters reported that a loan estimate from May 28, 2021, confirmed Cook labeled her Atlanta residence as a “vacation home.”
In response to Trump’s firings, especially of Democratic appointees in positions such as the Federal Trade Commission, many experts warn about the implications, suggesting these actions not only threaten the Fed’s autonomy but also risk economic stability.The actual risk might delve deeper than the individual actors at these agencies.
While confronting Trump’s move, Cook’s lawsuit claims his intention to dismiss her is legally unjustified under the Federal Reserve Act.
Questions remain on how the Supreme Court might rule on his decisions regarding top officials at quasi-independent agencies. Considering past suits relating to removals, the court has consistently avoided defining a strict barrier around the Fed, as its distinct historical structure continues to draw legal commentary.
