A federal appellate panel in Washington has ruled against President Donald Trump’s attempt to dismiss Lisa Cook from her position on the Federal Reserve Board of Governors while her lawsuit regarding her firing is in progress. This decision came from a divided three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit, with Biden appointees Michelle Childs and Bradley Garcia supporting the denial, while Trump appointee Gregory Katsas dissented.
The majority opinion emphasized due process, highlighting that the government acknowledged it failed to provide Cook with even basic procedural safeguards, specifically, notice of the allegations against her and an opportunity to respond before her dismissal. In contrast, Katsas argued that the district court erred in determining that Cook held a constitutionally protected property interest in her position, contending that she could be removed due to actions preceding her appointment.
The Supreme Court may soon intervene in this pivotal issue, which has significant implications for both the economy and the scope of presidential authority. Recent developments accelerated after U.S. District Judge Jia Cobb issued a preliminary ruling on September 9 to keep Cook on the board, asserting that she has a strong likelihood of succeeding in her appeal.
Trump’s rationale for seeking Cook’s dismissal stems from allegations of mortgage fraud supposedly committed before her Senate confirmation to a term that extends to 2038. Both Cook and Cobb are Biden appointees, adding political weight to the proceedings. Judge Cobb noted that Cook made a compelling argument that Trump’s move to oust her violated federal law requiring just cause for removal, clarifying that the “for cause” provision does not extend to conduct prior to her assuming office.
The Trump administration subsequently appealed Cobb’s order, requesting the D.C. Circuit to act expediently before an upcoming meeting of the Federal Open Market Committee that would involve crucial discussions on monetary policy and interest rates. Trump has been advocating for interest rate cuts from the Federal Reserve, a body designed to function independently from presidential oversight. This ongoing litigation is reflective of a broader theme during Trump’s second term that probes the extent of presidential influence over historically autonomous agencies.
Cook has not been formally charged with any fraudulent activity, and recent media reports have raised doubts about the validity of the allegations against her. Her legal team characterized Trump’s actions as being based on “unsubstantiated accusations.” They warned that allowing such a removal would undermine the independence of the Federal Reserve and could destabilize financial markets.
In her initial lawsuit, Cook described Trump’s efforts to remove her as “unprecedented and illegal,” stressing that the independence of the Federal Reserve is crucial for its ability to make sound economic decisions free from political interference. She cautioned that if the public perceives that monetary policy is influenced by political pressures, it would erode confidence in the institution.
Judge Cobb noted the historical significance of this case, as it represents the first purported “for cause” removal of a Board Governor in the Federal Reserve’s history and raises novel legal issues. The anticipated Supreme Court ruling may hinge on how far the justices require the president to prove just cause for dismissal, and whether the president’s determination is subject to judicial review. The administration contends that such determinations fall within the exclusive domain of presidential authority.
