Edith Hejberg
The ruling keeps Cook in place ahead of a major policy meeting expected to result in a U.S. interest rate cut.
A U.S. appeals court has denied former President Donald Trump’s bid to oust Federal Reserve Governor Lisa Cook, marking the first presidential attempt to remove a Fed board member since the central bank’s creation in 1913.
Supreme Court Appeal on the Horizon
With the Federal Reserve’s policy meeting set for Tuesday and Wednesday, the Trump administration now has only hours to appeal the decision to the U.S. Supreme Court.
The White House has already announced its intention to do so, insisting that Cook’s dismissal was lawful and for cause.
Accusations and Legal Grounds in Question
The attempt to remove Cook centers on allegations that she committed mortgage fraud before her Senate confirmation in 2022, claims she denies.
A lower court judge found those accusations likely insufficient under the law, which only allows Fed governors to be removed “for cause,” a term not clearly defined in the founding statute.
A Split Decision Reflects Partisan Divide
The D.C. Circuit Court ruled 2-1 against Trump, with both judges in the majority appointed by President Biden.
In the majority opinion, Judge Bradley Garcia wrote that Cook was denied her Fifth Amendment right to due process, noting that she was given no real opportunity to respond to the allegations.
Fed Maintains Silence, Seeks Quick Resolution
The Federal Reserve itself has stayed neutral, making no legal arguments in the case. However, it has asked the courts for a fast resolution and affirmed it will abide by the outcome, an effort to preserve its independence and credibility in financial markets.
Senate Confirms Trump’s Fed Nominee
In a related move, the Senate narrowly confirmed Trump’s nominee Stephen Miran to a vacant seat on the Fed board by a 48–47 vote.
Miran is now expected to participate in the same policy meeting as Cook, adding further tension to the board’s already high-stakes deliberations.
Independence of the Fed at Stake
Trump’s challenge strikes at the heart of the Fed’s independence, a principle considered vital to maintaining objective monetary policy.
No Fed governor has ever been removed by a president, and the courts have never had to interpret the “for cause” provision, until now.
Legal Precedent: Fed Not Like Other Agencies
Though the Supreme Court has recently sided with Trump in other removal cases, it signaled earlier this year that the Fed is structurally unique.
Unlike other agencies, the Fed is seen as a quasi-private entity, making Cook’s protections potentially stronger under existing law.
Mortgage Fraud Allegations Under Scrutiny
The administration alleges Cook misrepresented multiple properties to gain favorable mortgage terms.
However, documents reviewed by Reuters and official property tax records cast doubt on those claims, potentially strengthening Cook’s defense and suggesting political motives behind the dismissal.
Criminal Probe Adds to Tensions
Despite the court’s ruling, the Justice Department is moving forward with a criminal probe into Cook’s mortgage filings.
Grand jury subpoenas have been issued in both Georgia and Michigan, raising the stakes even further in a case that could reshape the balance between politics and monetary policy in the U.S.
This article is made and published by Edith Hejberg, which may have used AI in the preparation
