By Jan Wolfe
In a move that’s shaking things up, President Trump’s administration has taken steps to ask the U.S. Supreme Court for permission to fire Federal Reserve Governor Lisa Cook. This unprecedented ask has stirred a legal battle that’s raising eyebrows about the independence of the Fed, which has been around since 1913.
The Justice Department is urging the Supreme Court justices to overturn a prior ruling by U.S. District Judge Jia Cobb. This ruling temporarily blocks Trump’s attempt to remove Cook, who was appointed by former Democratic President Joe Biden. Cobb’s decision previously indicated that Trump’s reasons for wanting to dismiss Cook—specifically claims of mortgage fraud she denies—likely don’t meet legal standards for removal.
The Justice Department argued that this situation represents a dangerous overreach of judicial interference with the President’s powers. They emphasized that the President ought to have the authority to remove Fed board members at his discretion.
Recently, Cook participated in a crucial two-day Federal Reserve meeting where the group voted to cut interest rates by a quarter point to address concerns regarding strained job markets. Cook was among those in favor of this decision.
The U.S. Court of Appeals for the District of Columbia backed Judge Cobb’s decision, ruling 2-1 against the administration’s request. Following this setback, the Trump team declared their intention to make their case to the Supreme Court.
On Tuesday, White House spokesperson Kush Desai asserted, “The President lawfully removed Lisa Cook for cause. The Administration looks forward to a favorable outcome on this matter.” This assertive stance underscores the Trump administration’s definitive approach toward its powers.
Certain provisions in the legislation that established the Federal Reserve are meant to insulate it from political pressures, allowing Fed governors to be removed only for valid reasons. Yet, the law doesn’t specifically define “cause” or lay out formal removal procedures. Historically, no president has ever exercised this power to oust a Fed governor, making this entire scenario a landmark legal query.
Lisa Cook’s prominence isn’t just marked by her position as a Fed governor; she is also notable for being the first Black woman to serve in this capacity. After Trump announced his intent to dismiss her on August 25, Cook responded by suing the President, arguing that the accusations against her were illegitimate and served as a cover for her monetary policy views.
The case brings up wider questions about presidential power and the Fed’s autonomy in crafting monetary policy. Decisions related to the Federal Reserve’s operation without undue political influence are crucial to maintaining its efficacy in tasks like controlling inflation.
This year, Trump has been pushing vigorously for immediate rate cuts from the Fed and has publicly criticized Fed Chair Jerome Powell, labeling him all sorts of disparaging names. Tensions continue to rise as the administration seeks interventions from the Supreme Court to implement its policies and climb beyond lower court restrictions. Given the conservative tilt with a 6-3 majority, the Supreme Court has generally leaned in favor of the Trump administration when it comes to such requests.
A notable indication of the Supreme Court’s perceptions in this matter was a prior May ruling, which implied that the Fed operates distinctly compared to other federal agencies, indicating a more protective stance around it. The ability to remove officials from such quasi-private institutions like the Fed is not to be taken lightly.
As the controversy unfolds, the allegations against Cook, tied to discrepancies on her mortgage applications prior to her entry into office, have sparked a range of allegations but have also faced questioning. While claims pitched by Trump allege that Cook misrepresented properties for better mortgage terms, relevant documents reviewed suggest a more complex picture.
The scope of Trump’s claims even extends to criminal investigations into Cook’s finances, revealing ongoing legal scrutiny surrounding mortgage issues affecting her before she took office. All of this raises the stakes surrounding both individual legitimacy and broader judicial independence in the federal financial landscape.
(Reporting by Jan Wolfe and Andrew Chung; Editing by Will Dunham)
