Topline
President Donald Trump is seeking a swift court battle over whether Federal Reserve Governor Lisa Cook can be fired ahead of the Fed’s next meeting on Tuesday, with a federal appeals court laying out a schedule late Thursday that sets up a quick ruling on whether Cook can at least temporarily be removed—and potentially allows the Supreme Court to weigh in.
Trump is appealing a lower court ruling that prohibits him from firing Cook, as the president has sought to remove her from the board over purported issues with her mortgage statements.
The president has appealed that ruling, and has asked an appeals court to block it and let him fire Cook by the close of business on Monday, in time for the meeting of the Federal Open Market Committee, which includes the Board of Governors, on Tuesday.
The appeals court signaled it intends to follow that timeline, announcing a schedule late Thursday that directs both sides to submit all their necessary filings by 3 p.m. Sunday, meaning a ruling could come Sunday evening or any time on Monday.
Should the court rule quickly, that could also give the losing party—either Trump or Cook—time to ask the Supreme Court to step in and rule on Cook’s termination before the Tuesday meeting.
The president has only asked for a temporary pause of the court’s ruling while the case moves forward, so whatever the court decides won’t be a final decision, and the appeals court could still issue a more lasting ruling that either keeps Cook in her job—or returns her to it, if the appeals court first lets her be temporarily terminated—or gives Trump license to fire her.
Trump has argued Cook should be fired because of allegations made by Bill Pulte, Trump’s director of the Federal Housing Finance Agency, who has claimed Cook improperly listed two properties as being her “primary residence” on mortgage applications, which may have allowed her to obtain better terms. Cook has denied any wrongdoing, and argues Trump can only remove her for misconduct in her role at the Fed. Trump has more broadly sought to exert influence over the typically independent Fed since taking office, repeatedly urging it to lower interest rates and suggesting he could try to fire Federal Reserve chair Jerome Powell. Firing Cook, who was appointed by former President Joe Biden, has been viewed as Trump trying to get more power over the Fed, as Trump could replace her with an appointee more favorable to his policies. That would also mean the board would be made up of a majority of his appointees.
The Federal Open Market Committee, which consists of the Fed’s governors and other regional Reserve Bank presidents, will meet Tuesday and Wednesday next week about the nation’s monetary policy. While the Fed has so far shied away from cutting interest rates despite Trump’s protestations, Wall Street analysts now suggest a cut could be likely, citing recent economic markers like last week’s worse-than-expected unemployment report. The committee is expected to only cut interest rates by about a quarter of a point to 4.1%, the Associated Press notes, which is still less aggressive than the cuts the Trump administration has called for.
District Judge Jia M. Cobb ruled Trump can’t fire Cook—at least temporarily, while the case moves forward—because he can only remove her “for cause,” which is typically defined as referring to gross misconduct on the job. Unlike some other members of his administration, whom he can fire for any reason he chooses, Trump has more limited authority to fire members of the Fed’s board, with the Federal Reserve Act saying he can only terminate a board member “for cause.” Cook argued in her lawsuit that the alleged issues with her mortgages do not qualify, since she signed the mortgage documents before starting at the Fed and they’re not related at all to her official duties. Even if they did, Cook argued, she was not given a proper opportunity to present a defense, and the firing was still unlawful. Cobb agreed, ruling the Federal Reserve Act’s “for cause” provision means “the bases for removal of a member of the Board of Governors are limited to grounds concerning a Governor’s behavior in office and whether they have been faithfully and effectively executing their statutory duties.”
It’s unclear. Cook is the latest in a string of high-profile firings Trump has made since taking office, including targeting members of boards like the Fed’s Board of Governors that are typically meant to operate independently and free from political interference. The Supreme Court has so far largely upheld Trump’s right to fire those officials, issuing rulings that have cleared the way for Trump to fire federal officials like board members at the National Labor Relations Board and the Merit Systems Protection Board. Those rulings have come even despite a previous Supreme Court ruling that’s historically given independent boards broad protection from a president’s whims or political leanings, significantly weakening that precedent. The justices have so far suggested they believe the Federal Reserve is subject to greater independence, however, saying in a recent ruling greenlighting other board member firings that their decision does not apply to the Fed, which is “a uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States.” It remains to be seen whether that means the 6-3 conservative court will keep Cook in her role, or further weaken board members’ protections by allowing Trump to fire her.