(AFP) – A US federal judge on Tuesday temporarily blocked President Donald Trump’s move to fire Federal Reserve Governor Lisa Cook as she challenges her ouster from the central bank. Judge Jia Cobb granted Cook’s request for an order to remain on the bank’s board while her lawsuit plays out — just a week before a highly anticipated Fed rate meeting.
In her opinion, Judge Cobb found that Cook was “substantially likely” to succeed in certain claims, including her argument that Trump violated the Federal Reserve Act as her removal did not comply with the statute’s “for cause” requirement. “The public interest in Federal Reserve independence weighs in favor of Cook’s reinstatement,” Cobb added.
Trump did not respond to a question about the ruling asked by a reporter Tuesday night, as he exited a restaurant in Washington. Cook’s lawyer Abbe David Lowell praised the ruling, saying it “recognizes and reaffirms the importance of safeguarding the independence of the Federal Reserve from illegal political interference.” Lowell added, “Allowing the President to unlawfully remove Governor Cook on unsubstantiated and vague allegations would endanger the stability of our financial system and undermine the rule of law.”
The Supreme Court suggested in a recent ruling that Fed officials can only be removed “for cause,” which could be interpreted to mean malfeasance or dereliction of duty. In Tuesday’s opinion, Cobb also noted that Cook’s case was the first such removal “in the Federal Reserve’s 111-year history,” and questioned the nature of the Trump administration’s accusations. “‘For cause’ thus does not contemplate removing an individual purely for conduct that occurred before they began in office,” Cobb wrote.
Trump’s move to fire Cook also marked a dramatic escalation in his effort to exert control over the Fed, which he has repeatedly called on to lower interest rates immediately, going so far as to mock Chairman Jerome Powell as “Mr. Too Late.” However, policymakers have been cautious in cutting rates as they monitor the effects of Trump’s tariffs on the economy.
Trump recently said on social media that he was immediately removing Cook over claims of mortgage fraud. Cook faces allegations that she claimed two primary residences on mortgage documents in 2021 — one in Michigan and another in Georgia. A primary residence typically attracts better mortgage terms for a loan.
Cook became the first Black woman to serve on the Fed’s board in 2022.
© 2024 AFP
