President Donald Trump has asked the U.S. Supreme Court to remove Fed Governor Lisa Cook, escalating his fight for control over the central bank [Image by The Atlantic]
(The Post News) – The Trump administration has taken its war with the Federal Reserve to a new height, making an unprecedented appeal to the US Supreme Court to remove Federal Reserve governor Lisa Cook. The drastic move sets the stage for a historic confrontation regarding the president’s power and America’s central bank’s future independence.
Solicitor General John Sauer submitted the petition on Thursday, requesting that the justices overturn lower court rulings that blocked Cook’s dismissal. President Donald Trump had fired her last month on grounds of mortgage fraud, but Cook had gone to court and twice won.
This application is yet another example of improper judicial encroachment on the power of removal by the president,” Sauer contended. “The president could reasonably decide that interest paid by American people should not be determined by a governor who has apparently lied about facts regarding interest rates she bargained for herself.”.
Federal Reserve Uncharted Territory
If the Supreme Court rules in Trump’s favour, it will be the first time in Federal Reserve history that a sitting president has been successful in firing a governor.
Cook, who was appointed in 2022 by President Joe Biden, is an economist of high standing with academic appointments at Harvard and Stanford. She was also the first Black woman to serve on the Fed’s board of governors. Her 14-year term is set to run through 2038, a term meant to protect central bankers from political pressure.
Cook has refused to acknowledge any misconduct and warned that her removal could destabilize the economy. “Temporarily removing her from her position would pose a threat to our Nation’s economic stability and raise doubts regarding the Federal Reserve’s ongoing independence, endangering shock waves in the financial markets that could not be readily reversed,” her lawyers wrote.
The suit is based on claims by Federal Housing Finance Agency Director Bill Pulte that Cook improperly designated two homes, one in Michigan and one in Georgia, as her “primary residence” on mortgage records. A primary residence status can lead to lower interest rates.
Cook has not been indicted on any crime. She has, nevertheless, been accused of inconsistency in the documents that alternately described one property as a primary residence and others as a “vacation home.” In a statement issued by her attorney, she protests that the charges are baseless and politicized.
Last week, U.S. District Judge Jia Cobb decided the allegations were insufficient reason for dismissal, noting that they were not contrary to Cook’s performance or behaviour as a Fed governor. The D.C. Circuit Court of Appeals upheld that decision, noting that Cook was due “some kind” of process before removal.
Trump’s Pressure Campaign on the Fed
The showdown comes on the very day that the Fed must make its decisions on interest rates. On Wednesday, regulators lowered the benchmark rate by 25 basis points, contending that hiring was decelerating and inflation was being stubborn. Cook joined the majority.
Trump, however, had managed to install his ally Stephen Miran as a Fed governor just prior to the meeting. Miran defied the majority, backing Trump’s call for further cuts.
Trump has waged an unusually open war with the central bank for years. He has repeatedly criticized Fed Chairman Jerome Powell for keeping borrowing costs high, demanded aggressive rate cuts, and vowed to stack the Fed’s board with loyalists. “Powell MUST CUT INTEREST RATES, NOW, AND BIGGER THAN HE HAD IN MIND,” Trump posted on Truth Social this week.
The Supreme Court decision would redefine the scope of presidential powers. Though the Court has allowed Trump to remove heads of other independent stand-alone agencies, prior rulings eliminated special immunity for the Federal Reserve, terming it as a “uniquely structured” institution with a long tradition of independence.
The question then becomes who has the right to determine what is “cause” for removal. Trump’s argument is that it is the president alone. Lower courts argue that Cook is owed due process and that unconnected charges are not enough justification.
Markets and officials are closely watching. If Trump wins, the ruling could grant presidents vast new power over the Fed, redefining the creation of U.S. monetary policy, and potentially rocking confidence in America’s financial system globally.
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