Lisa Cook, the US Federal Reserve governor, will keep her job for now, despite Donald Trump’s extraordinary bid to remove her from the central bank’s board with immediate effect.
The US supreme court deferred action on the Department of Justice’s request to allow the president to fire Cook, at least until it hears oral arguments on the case in January.
Trump has launched an unprecedented campaign to exert greater control over the Fed, publicly lambasting the US central bank over its decisions, installing a close ally on its board of governors, and attempting to fire Cook.
His battle for influence has raised questions over the independence of the Fed, which for decades has steered the US economy without political interference.
Trump tried to “immediately” dismiss Cook in August, citing unconfirmed allegations of mortgage fraud dating back to before she joined the Fed in 2022. She has denied wrongdoing, and argued the president has no authority to fire her.
On Wednesday morning the supreme court considered his attempt to remove Cook – the first-ever bid by a president to fire a Fed official – and the administration’s complaints about judge’s order which had temporarily blocked Trump from firing her while litigation over the termination continues in a lower court.
The justices declined to immediately decide a justice department request to put on hold the judge’s order, enabling Cook to stay in post for now.
Abbe Lowell, of Lowell & Associates, and Norm Eisen, of the Democracy Defenders Fund, representing Cook, in a statement said: “The court’s decision rightly allows Governor Cook to continue in her role on the Federal Reserve board, and we look forward to further proceedings consistent with the court’s order.”
The justice department was contacted for comment. Karoline Leavitt, the White House press secretary, said the administration was looking forward to oral arguments before the court.
Carl Tobias, at the University of Richmond School of Law, suggested that the decision to keep Cook in place, and the court’s announcement that it would hear oral arguments on the merits of the case in January, were “good signs for both sides”.
“It does protect the independence of the Fed, at least in the short term,” Tobias told the Guardian. “The one big question is: even if they have arguments in January, when will they issue the ruling? That could come early, because I expect the government will ask them to expedite everything, but it could be as late as June.”
The court’s decision to maintain the status quo in the short term should allow markets to “settle down” and mitigate the uncertainty around the Fed, he added.
In creating the Federal Reserve in 1913, Congress passed a law called the Federal Reserve Act that included provisions to shield the central bank from political interference, requiring governors to be removed by a president only “for cause”, though the law does not define the term nor establish procedures for removal. The law has never been tested in court.
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Jia Cobb, a Washington-based US district judge, on 9 September ruled that Trump’s claims that Cook committed mortgage fraud before taking office, which Cook denies, were probably not sufficient grounds for removal under the Federal Reserve Act.
Cook, the first Black woman to serve as a Fed governor, sued Trump in August after the president announced he would remove her. Cook has said the claims made by Trump against her did not give the president the legal authority to remove her and were a pretext to fire her because of her monetary policy stance.
Trump has made no secret of his plans to influence the Fed, publicly describing plans to swiftly build “a majority” on its interest-rate setting committee of policymakers.
He has repeatedly broken with precedent to demand rate cuts, and attack senior Fed officials, including its chair, Jerome Powell, when they repeatedly defied these calls.
Powell has repeatedly stressed he is “strongly committed” to maintaining the Fed’s independence. His term as chair is due to end next year. The Trump administration has been drawing up plans to appoint a successor.
Reuters contributed reporting
Source: US Politics - theguardian.com
