An appeals court in the United States has ruled that Lisa Cook can keep her seat on the Federal Reserve for now, in a setback to President Donald Trump’s bid to fire the governor over as yet unproven claims of fraud.
In a 2-1 ruling issued late on Monday, the US Court of Appeals for the District of Columbia found that the Trump administration had not met the “stringent requirements” to stay a lower judge’s ruling that Cook should keep her position while the courts consider the grounds for her removal.
The ruling came a day before the Federal Reserve’s rate-setting committee is set to begin two days of deliberations on whether to lower interest rates.
Members of the Federal Open Market Committee are expected to lower the benchmark interest rate by at least a quarter percentage point.
Writing for the majority, Circuit Judge Bradley Garcia said Cook’s claim that she had been denied due process was “very likely meritorious” and had a “strong likelihood of success”.
“I agree with the district court’s conclusion that Cook’s due process claim is likely to succeed,” Garcia, an appointee of former President Joe Biden, said in the decision.
Garcia said the Trump administration did not dispute that it had given Cook “no meaningful notice or opportunity to respond to the allegations against her”.
“The government argues only that Cook ‘does not explain what difference a hearing would have made’,” he said.
“Even accepting that premise, Cook’s entitlement to process stands apart from whether she would succeed in securing a different outcome.”
Trump ordered the immediate removal of Cook, one of the seven members of the Fed’s board of governors, last month in an unprecedented move that stoked fears for the independence of the US central bank.
Trump, who has for months pressured the Fed to lower interest rates, said he took the action in view of evidence that Cook had made false statements on a mortgage application.
Cook has argued that her firing was illegal and challenged the move in court.
Under the Federal Reserve Act and US Supreme Court precedent, the president must demonstrate “cause”, widely interpreted to mean malfeasance, to fire any of the central bank’s governors.
No president has ever removed a Fed governor in the 111-year history of the bank.
Separately on Monday, the US Senate voted 48-47 to confirm Stephen Miran, the chair of Trump’s Council of Economic Advisers, to the Fed’s board of governors.
Democrats have raised concerns about Miran’s independence in light of his refusal to resign from his White House post and instead take a leave of absence.
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