A federal judge has halted the Trump administration’s effort to remove Federal Reserve Gov. Lisa Cook from the Federal Reserve’s Board of Governors. For now, she can continue to serve while contesting her dismissal.
The administration attempted to fire Cook after alleging that she falsified mortgage documents. Cook and her attorneys have fought back in court, claiming the administration’s efforts are politically motivated.
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Her lawyers have cited the president’s desire to appoint individuals to the Fed who will cut interest rates.
Recent ruling
Judge Jia Cobb ruled that Cook made a “strong showing” that her removal violated the Federal Reserve Act. The act only allows members to be fired for cause.
In the ruling, Cobb said the administration’s justifications for removing Cook did not meet the threshold for sufficient cause. The judge’s argument noted that the action Cook’s accused of took place before her tenure as a Fed governor.
“The best reading of the ‘for cause’ provision is that the bases for removal of a member of the Board of Governors are limited to grounds concerning a governor’s behavior in office and whether they have been faithfully and effectively executing their statutory duties,” Cobb said in her ruling. “‘For cause’ thus does not contemplate removing an individual purely for conduct that occurred before they began in office.”
Legal battle may continue
The administration is likely to appeal the ruling, progressing the case through the legal hierarchy. It’s possible the legal process could be lengthy, potentially even reaching the Supreme Court.
White House spokesperson Kush Desai made a statement following the ruling. He said, “This ruling will not be the last say on the matter, and the Trump administration will continue to work to restore accountability and confidence in the Fed.”
The case also means Cook will attend the next policy meeting on Sept. 16, a session Trump is closely watching as he demands significant interest rate cuts.
