President Donald Trump on Wednesday appealed a federal judge’s order that prevented him from firing Federal Reserve Governor Lisa Cook, escalating a legal fight over the president’s power to reshape the central bank.
The appeal, filed in the U.S. Court of Appeals for the District of Columbia Circuit, came a day after U.S. District Judge Jia Cobb issued an injunction allowing Cook to remain on the Fed’s seven-member board while her lawsuit proceeds. The case marks the first challenge to a president’s attempt to remove a Fed governor in the central bank’s 111-year history.
Judge Cobb, a Biden appointee, ruled that Cook was “substantially likely” to prevail on her claim that Trump’s August dismissal violated the Federal Reserve Act, which permits governors to be removed only “for cause.” The judge concluded that the law refers to misconduct or neglect while in office, not allegations of misconduct from before appointment. She also found that Trump’s method of removal—via a social-media post citing mortgage-fraud claims—likely violated Cook’s Fifth Amendment right to notice and a hearing.
By construing Cook’s request as a motion for a preliminary injunction rather than a temporary restraining order, Cobb’s decision gave Cook greater protection but also provided Trump’s legal team an immediate avenue of appeal. The Justice Department has said it intends to pursue the case quickly, with the Supreme Court potentially the final arbiter.
Cook, a Biden appointee confirmed to a 14-year term in 2023, has denied any wrongdoing. Her lawyers argue that Trump used mortgage-fraud allegations—surfaced by Federal Housing Finance Agency Director Bill Pulte—to create a pretext for ousting her and filling the seat with his own nominee. The Justice Department has opened a probe into the allegations, which Cook’s lawyers describe as either baseless or the result of clerical error.
The dispute comes days before the Fed’s Sept. 16-17 policy meeting, where officials will weigh whether to cut interest rates. Trump has repeatedly pressed the Fed to lower borrowing costs, and he has nominated economist Stephen Miran to fill a separate vacancy created by the resignation of Governor Adriana Kugler.
The fight underscores the unusual independence of the Federal Reserve, whose governors serve staggered 14-year terms and are insulated from annual appropriations and most political oversight. Recent Supreme Court rulings have narrowed job protections at other regulatory agencies, but the Court has suggested that the Fed’s structure may stand on stronger footing.
“The public interest in Federal Reserve independence weighs in favor of Cook’s reinstatement,” Cobb wrote in her opinion.
Fed Chair Jerome Powell and the other board members were named as defendants in Cook’s lawsuit but have declined to take a position, pledging only to follow the courts. Following Cobb’s ruling on Tuesday, the Fed pointed back to its statement
On Wednesday, shortly before the appeal was filed, the Senate Banking Committee voted along party lines to recommend confirmation of Trump’s nominee Stephen Miran to a separate seat left vacant by the sudden resignation of Governor Adriana Kugler last month.
Read the full article here