Appeals Court Upholds Lisa Cook’s Position as Fed Governor, Denies Trump’s Attempt to Oust Her

A federal appeals court has decided that President Trump cannot fire Lisa Cook from the Federal Reserve Board of Governors. This ruling upholds a lower court’s order that reinstated her. The D.C. Circuit Court ruled 2-1 against the Trump administration’s emergency request, indicating that they may appeal to the Supreme Court. Unless the high court steps in quickly, Cook is expected to continue serving through an upcoming Federal Reserve meeting.

Trump initiated Cook’s removal last month based on accusations of mortgage fraud, which Cook denies. Judge Bradley Garcia stated that Cook likely has a strong argument regarding her due process rights being violated. He mentioned that Cook has a legal interest in her job, meaning she deserves an opportunity to defend herself before any removal.

The judge also pointed out that Trump’s accusations largely stem from Cook’s actions before she took her position at the Fed. The Federal Reserve Act allows the president to remove a governor only “for cause,” which the court found Trump did not have.

Cook’s legal team argues that her alleged missteps occurred before she became a governor, making it impossible for the president to legally justify her removal. They claim that the real reason for her dismissal is Trump’s dissatisfaction with her policy decisions, especially concerning interest rates.

While Trump has criticized the Fed for its slow response in cutting interest rates, economists expect the central bank to announce a rate cut soon. If Trump succeeds in removing Cook and appoints a replacement, he would have appointed most members of the Board of Governors.

This case stands out because it’s the first time a sitting president has attempted to fire a Fed board member, which raises questions about the Fed’s independence. Critics warn that this move could destabilize markets if the central bank is seen as influenced by political pressures.

In recent discussions about the Federal Reserve’s independence, many experts emphasize its crucial role in maintaining economic stability. For example, Harvard economist Kenneth Rogoff remarked, “Political pressure on the Fed can lead to poor decisions that may result in inflation or recession.” The court’s decision to uphold Cook’s position reflects an attempt to safeguard this independence.

While the Trump administration argues that they have legal grounds for Cook’s removal, the unique structure of the Federal Reserve complicates these discussions. Historical trends indicate that the independence of central banks has been foundational for economic integrity, making this conflict one to watch closely as it develops.

For more on the implications of this case, you can visit CBS News for ongoing updates.

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