In a significant development this Wednesday, the U.S. Supreme Court ruled to allow Lisa Cook to retain her position as a Federal Reserve Governor. The court chose not to immediately grant the Trump administration’s request for her swift removal from the influential central bank board.
Issuing a concise, unsigned order, the Supreme Court confirmed it would listen to arguments in January regarding former President Donald Trump’s ongoing attempt to unseat Ms. Cook from the Fed board.
A central point for the court’s review will be whether to uphold or overturn a lower court’s decision that sided with Ms. Cook, as her legal battle against Mr. Trump’s attempt to dismiss her proceeds.
This decision stands out as a rare moment when Mr. Trump’s emergency appeal did not immediately yield the desired outcome from the high court.
Meanwhile, in December, the justices are scheduled to hear a distinct yet related case concerning Mr. Trump’s power to dismiss officials from other independent federal agencies. This broader case will explore whether a president can unilaterally remove such officeholders.
However, a secondary, critical aspect of that December case could directly impact Ms. Cook’s situation: the question of whether federal judges possess the authority to block these dismissals outright, or if their power is limited to awarding back pay to officials deemed wrongfully terminated.
Mr. Trump had previously attempted to remove Ms. Cook before the Federal Reserve’s September meeting, where interest rates are set. This effort was thwarted when a judge declared the firing unlawful, and a split appeals court subsequently denied the Trump administration’s urgent appeal.
Following the meeting, which saw a quarter-percentage-point cut in a crucial interest rate, the administration promptly filed a new emergency appeal with the Supreme Court.
The White House’s aggressive campaign to remove Ms. Cook represents an unprecedented move to alter the composition of the Fed board, an institution intentionally structured to operate independently of daily political influence. Historically, no sitting Fed Governor has ever been fired in the central bank’s 112-year existence.
Ms. Cook, appointed by Democratic President Joe Biden, has firmly stated her refusal to vacate her post, declaring she will not be ‘bullied’ by Mr. Trump. Her legal representative, Abbe Lowell, reiterated that she intends to ‘continue to carry out her sworn duties as a Senate-confirmed Board Governor.’
In a separate but related development, Senate Republicans recently approved Stephen Miran, Mr. Trump’s choice for another vacant seat on the Fed board. Both Ms. Cook and Mr. Miran participated in the recent Fed meeting, where Mr. Miran cast the sole dissenting vote, advocating for a more significant interest rate reduction.
Ms. Cook’s next chance to cast a vote on monetary policy will be during the Fed’s interest rate-setting committee meeting, slated for October 28-29.
Mr. Trump’s accusations against Ms. Cook stem from alleged mortgage fraud. He claims she designated two properties, one in Michigan and one in Georgia, as ‘primary residences’ in June and July 2021, prior to her appointment to the Fed board. This type of declaration can result in more favorable mortgage terms, such as lower interest rates and smaller down payments, compared to classifying a property as a rental or secondary home.
In his Supreme Court filing, Solicitor-General D. John Sauer stated, “Put simply, the President may reasonably determine that interest rates paid by the American people should not be set by a Governor who appears to have lied about facts material to the interest rates she secured for herself — and refuses to explain the apparent misrepresentations.”
Ms. Cook vehemently denies any illicit activity and has not faced criminal charges. Documents obtained by The Associated Press indicate that in May 2021, Ms. Cook identified her Atlanta condominium as a ‘vacation home’ on a loan estimate. Furthermore, she referred to it as a ‘2nd home’ in a security clearance application. These records seem to directly contradict the administration’s allegations of fraud.
U.S. District Judge Jia Cobb’s ruling highlighted that the administration failed to meet the legal standard for dismissing Fed Governors, which mandates a ‘for cause’ reason, specifically defined as misconduct committed while holding office. Ms. Cook’s tenure on the Fed board began in 2022.
Additionally, Judge Cobb determined that Mr. Trump’s attempted dismissal would have violated Ms. Cook’s due process rights, denying her the fundamental legal opportunity to challenge the termination.
A federal appeals court panel in Washington, by a 2-1 vote, rejected the administration’s appeal to proceed with Ms. Cook’s firing.
Mr. Trump’s legal team contended that even if the alleged conduct preceded her governorship, her actions “indisputably calls into question Cook’s trustworthiness and whether she can be a responsible steward of the interest rates and economy.”