Fed governor Cook to seek court order blocking her firing by Trump
A case that could provide the Trump administration with new and expansive power over the traditionally independent Federal Reserve will get its first court hearing on Friday.
Federal Reserve governor Lisa Cook has requested an emergency injunction to block US President Donald Trump’s attempt to fire her over allegations that she committed mortgage fraud when she purchased a home and condo in 2021.
She was appointed to the Fed’s board by former president Joe Biden in 2022.
If her firing is allowed to stand, it would likely erode the Fed’s longstanding independence from day-to-day politics.
No president has ever fired a Fed governor in the agency’s 112-year history.
Economists broadly support Fed independence because it makes it easier for the central bank to take unpopular steps such as raising interest rates to combat inflation.
Ms Cook has asked the court to issue an emergency order that would block Mr Trump’s firing of her and enable her to remain on the seven-member board of governors while her lawsuit seeking to overturn the firing makes its way through the courts.
Many observers expect her case will end up at the US Supreme Court.
The law governing the Fed says the president cannot fire a governor just because they disagree over interest rate policy.
Mr Trump has repeatedly demanded that the Fed, led by chairman Jerome Powell, reduce its key interest rate, which is currently 4.3%.
Yet the Fed has kept it unchanged for the last five meetings.
But the president may be able to fire a Fed governor “for cause”, which has traditionally been interpreted to mean inefficiency, neglect of duty, or malfeasance.
Ms Cook’s lawyers argue that it also refers only to conduct while in office.
They also say that she was entitled to a hearing and an opportunity to rebut the charges.
“The unsubstantiated and unproven allegation that Governor Cook ‘potentially’ erred in filling out a mortgage form prior to her Senate confirmation — does not amount to ‘cause’,” the lawsuit says.
If Mr Trump can replace Ms Cook, he may be able to gain a 4-3 majority on the Fed’s governing board.
Mr Trump appointed two board members during his first term and has nominated a key White House economic adviser, Stephen Miran, to replace Adriana Kugler, another Fed governor who stepped down unexpectedly on August 1.
Mr Trump has said he will only appoint people to the Fed who will support lower rates.
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