In a significant development regarding the governance of the U.S. Federal Reserve, a federal appeals court has ruled that President Donald Trump cannot dismiss Federal Reserve Governor Lisa Cook prior to an important meeting of the central bank’s policy committee this week. This decision comes as Cook’s participation is deemed crucial ahead of the pivotal discussions on potential interest rate adjustments.
The U.S. Court of Appeals for the District of Columbia Circuit issued its ruling on a Monday, affirming that the lower court’s decision to block Cook’s dismissal would remain in effect while she pursues legal action against the president’s decision. Trump’s legal team had filed an emergency request to delay the enforcement of the lower court’s ruling, but the appellate court determined that the request did not meet the rigorous standards required for a stay.
This situation stems from a move by Trump last August when he sought to fire Cook “for cause,” referencing allegations of mortgage fraud made by Bill Pulte, the director of housing finance under his administration. This attempt marked a departure from traditional practices, raising concerns about the independence of the Federal Reserve, especially given Trump’s history of publicly criticizing Fed Chairman Jerome Powell for not lowering interest rates to his liking.
While the president had previously considered dismissing Powell, the Supreme Court’s earlier ruling seems to have shielded the Fed chair from immediate threats. However, Trump has proceeded with efforts to remove Cook, an appointee of former President Joe Biden, who has consistently supported Powell’s policies. Cook, for her part, has denied the allegations of mortgage fraud and has taken legal steps to protect her position.
The appeals panel reviewing the case consisted of three judges, including J. Michelle Childs and Bradley Garcia, both appointed by Biden, who sided against Trump’s request for a speedy stay. Judge Garcia, in a concurring opinion, supported the lower court’s stance, indicating that Trump’s proposed action likely violated the Due Process Clause of the Constitution. He emphasized the uniqueness of this case among other presidential removal challenges.
Contrastingly, the third judge, Gregory Katsas, appointed by Trump, dissented, arguing that the legal findings against the president’s request were incorrect. He stated that Cook should not be shielded from dismissal for actions prior to her appointment and posited that she does not have a constitutionally protected interest in her position. Katsas contended that the balance of interests favored the government, advocating for the approval of the emergency stay.
As the Federal Reserve gears up for its upcoming two-day meeting, the implications of Cook’s presence, alongside the tensions surrounding her position, add a noteworthy layer to the ongoing discussions about monetary policy and the stability of central banking in America. The White House has not yet commented on the ruling or its potential ramifications.
