A federal appeals court Monday refused the Trump administration’s request to permit Federal Reserve board of governors member Lisa Cook’s firing before this week’s Fed meeting, setting the stage for a potential Supreme Court battle.
Without the justices’ intervention, Cook is set to participate in the Fed’s upcoming vote on interest rate cuts after a judge last week ruled her firing likely unlawful and reinstated her as the litigation proceeds.
The 2-1 decision from the U.S. Court of Appeals for the District of Columbia Circuit keeps that ruling intact, rejecting President Trump’s bid to fire Cook over mortgage fraud accusations, for now.
“Given these unique circumstances, and Cook’s strong likelihood of success on at least her due process claim, the government’s request for relief is rightly denied,” U.S. Circuit Judge Brad Garcia wrote for the majority.
Garcia was joined by U.S. Circuit Judges Michelle Childs, both nominated to the bench by former President Biden.
U.S. Circuit Judge Gregory Katsas, the panel’s sole Trump appointee, dissented.
“In my view, Cook cannot show error at all, much less such an extreme error as to warrant correction,” Katsas wrote.
Trump fired Cook late last month following a criminal referral that alleges she falsely deemed properties in Michigan and Georgia as primary residences weeks apart in 2021 and improperly represented a third property as her “second home.”
The president has long taken aim at the Fed for not lowering interest rates quicker, and Cook’s firing marks the president’s latest bid at terminating an independent agency leader who, under federal law, cannot be terminated without proper cause.
At the other agencies, Trump doesn’t purport to have cause in his firings, and his administration instead contends that their removal protections are unconstitutional.
At the Fed, however, the president claims he has cause and is following the statute. Trump administration lawyers argue that the courts have no authority to second-guess the president on the mortgage fraud allegations, which amount to a valid reason.
“The public and the Executive share an interest in ensuring the integrity of the Federal Reserve, and that requires respecting the President’s statutory authority to remove Governors ‘for cause’ when such cause arises,” the Justice Department wrote in court filings Sunday.
Cook’s lawyers cautioned the appeals panel against intervention. They argue that Trump didn’t have a valid cause, and Cook had the right to a hearing to contest the allegations.
They also pointed the court to news reports that emerged last week that Cook referred to her Atlanta property as a “vacation home” in a loan estimate, saying it undercut the allegations.
"A stay by this court would therefore be the first signal from the courts that our system of government is no longer able to guarantee the independence of the Federal Reserve,” Cook’s attorneys wrote in court filings.
“Nothing would then stop the president from firing other members of the Board on similarly flimsy pretexts. The era of Fed independence would be over,” they continued.
Cook’s lawyers have said unequivocally she “did not ever commit mortgage fraud.”
The case arrived at the D.C. Circuit after U.S. District Judge Jia Cobb, a Biden appointee, on Tuesday reinstated Cook as her legal challenge proceeds.
It has left the administration racing to the appeals courts ahead of this week’s meeting, when economists widely expect the Fed will lower its key interest rate.
With its loss at the D.C. Circuit, the administration could still seek relief in the Supreme Court, which has regularly sided with Trump in emergency cases.
The Hill has reached out to Cook’s legal team and the White House for comment.
Updated at 8:37 p.m. EDT
Source: The Hill - News
