The U.S. Supreme Court has said it will hear debate about President Donald Trump’s efforts to remove Federal Reserve Governor Lisa Cook from her post. The court’s announcement means Cook will remain at work for now.
The High Court announced its decision on Wednesday.
Recommended Stories
List of 4 itemsEnd of the list
The White House is trying to remove Cook by bidding for the first time as the president attempts to fire Fed officials, an unprecedented challenge to central bank independence.
The judge refuses to immediately decide the Justice Department’s request to hold off the Justice Department’s order, temporarily blocking Republican presidents from temporarily blocking former Democratic president Joe Biden’s appointees, while the case continues in lower courts.
The judge said he would hear the incident in January.
When creating the Fed in 1913, Congress passed a law called the Federal Reserve Act. This included provisions to protect central banks from political interference, such as allowing the government to be removed by the president alone “for a cause,” but the law does not define terminology or establish procedures for removal. The law has never been tested in court.
Washington, D.C.-based US District Jia Cobb determined on September 9 that Cook had allegedly committed a mortgage fraud before he refused.
On August 25, Trump said he was removing cooks from the Fed’s board, citing allegations that he forged records to obtain favorable terms on his mortgage before joining the central bank in 2022. Her term is set to expire in 2038.
Cook, the first black woman to serve as Fed governor, quickly sued Trump. Cook said Trump’s claims against her were an excuse to fire her for her financial policy stance without giving the president any legal authority to exclude her.
In a 2-1 ruling on September 15, the District of Columbia Circuit Court of Appeals denied the administration’s request to hold off Cobb’s order.
A vast view of the presidential forces
In a series of decisions over the past few months, the Supreme Court has allowed Trump to remove members of various federal agencies that have established Congress as independent of direct presidential control despite similar employment protections for these posts. The decision suggests that a 6-3 conservative majority court may be prepared to abandon the important 1935 precedent that maintains these protections in cases involving the US Federal Trade Commission.
However, the court signaled that the Fed could be treated as different from other administrative agencies, and noted that in May it involved a singular historical tradition in a case involving the firing of two Democrats on the Federal Labor Commission, which said the Fed was “a uniquely structured, semi-private entity.”
Trump’s bid to fire Cook reflects the vast views of the presidential forces he has argued since taking office in January. As long as the president has identified the cause of the removal, Cook’s looting is within his “unreviewable discretion,” the Justice Department said in a September 18 filing with the Supreme Court.
“Simply put, the president may reasonably determine that interest paid by the American people should not be set by a governor who appears to have lied to the interest rates he has set for him.
Cook’s lawyer told the Supreme Court on September 25 that he granted Trump’s request.
The 18 former US Federal Reserve officials, the Treasury Secretary and other Supreme Court groups who served under the president of both parties have also urged the Supreme Court not to create a fire for Trump.
The group included the past three Fed chairs: Janet Yellen, Ben Bernanke and Alan Greenspan. The simplest of all, they wrote that by allowing this dismissal, it would threaten the Fed’s independence and erode the public’s confidence in it.
Cook attended the Fed’s highly anticipated two-day meeting in Washington, DC in September. There, the central bank decided to cut interest rates by a quarter percentage point as policymakers responded to concerns about the decline in the job market. Cook was among those voting in favor of the cut.
Pressure on FRED
Concerns about federal government independence from the White House in setting monetary policy could have ripple effects across the world economy.
The incident has impacted the Fed’s ability to set interest rates regardless of politicians’ wishes, which are widely seen as extremely important to central banks’ capabilities, such as working independently and performing tasks such as managing inflation.
This year, Trump called for the Fed to actively cut, and denounced Fed Chairman Jerome Powell for his stewardship over monetary policy as the central bank focused on fighting inflation. Trump calls Powell “Numbskull,” “incompetent,” and “stubborn idiot.”
