The administration of United States President Donald Trump has asked an appeals court to remove Lisa Cook from the Federal Reserve’s board of governors by Monday, before the central bank’s next vote on interest rates.
The request on Thursday represents an extraordinary effort by the White House to shape the board before the Fed’s interest rate-setting committee meets next week on Tuesday and Wednesday.
At the same time, Senate Republicans are pushing to confirm Stephen Miran, Trump’s nominee to an open spot on the Fed’s board, which could happen as soon as Monday.
In a court filing on Thursday, the Department of Justice asked the US Court of Appeals for the DC Circuit to pause US District Judge Jia Cobb’s Tuesday ruling temporarily blocking Cook’s removal, pending the administration’s appeal.
Trump moved to fire Cook in late August. Cook, who denies any wrongdoing, filed a lawsuit saying Trump’s claim that she engaged in mortgage fraud before she joined the central bank did not give him legal authority to remove her, and was a pretext to fire her for her monetary policy stance.
Cobb’s ruling prevents the Fed from following through on Cook’s firing while her lawsuit moves forward.
In their emergency appeal, Trump’s lawyers argued that even if the conduct occurred before her time as governor, her alleged action “indisputably calls into question Cook’s trustworthiness and whether she can be a responsible steward of the interest rates and economy”.
The administration asked an appeals court to issue an emergency decision reversing the lower court by Monday. If their appeal is successful, Cook would be removed from the Fed’s board until her case is ultimately resolved in the courts, and she would miss next week’s meeting.
If the appeals court rules in Cook’s favour, the administration could seek an emergency ruling from the Supreme Court.
The case, which will likely end up before the US Supreme Court, has ramifications for the Fed’s ability to set interest rates without regard to politicians’ wishes, widely seen as critical to any central bank’s ability to keep inflation under control.
The Supreme Court and lower appeals courts, including the DC Circuit, have temporarily lifted several other rulings that briefly blocked Trump from firing officials at agencies that have historically been independent from the White House.
On Wednesday, however, the DC Circuit blocked Trump from firing US Copyright Office director Shira Perlmutter while she appeals a lower court’s refusal to reinstate her to the post.
Trump has demanded that the Fed cut rates immediately and aggressively, repeatedly berating Fed Chair Jerome Powell for his stewardship over monetary policy. Cook has voted with the Fed’s majority on every rate decision since she started in 2022, including on both rate hikes and rate cuts.
Fed’s independence
The law that created the Fed says governors may be removed only “for cause”, but does not define the term nor establish procedures for removal. No president has ever removed a Fed governor, and the law has never been tested in court.
Cobb on Tuesday said the public’s interest in the Fed’s independence from political coercion weighed in favour of keeping Cook at the Fed while the case continues.
She said that the best reading of the law is that a Fed governor may only be removed for misconduct while in office. The mortgage fraud claims against Cook all relate to actions she took prior to her US Senate confirmation in 2022.
Trump and William Pulte, the Federal Housing Finance Agency director appointed by the president, say Cook inaccurately described three separate properties on mortgage applications, which could have allowed her to obtain lower interest rates and tax credits.
The Justice Department has also launched a criminal mortgage fraud probe into Cook and has issued grand jury subpoenas out of both Georgia and Michigan, according to documents seen by Reuters and a source familiar with the matter.
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