President Donald Trump has asked the Supreme Court to allow him to fire Federal Reserve board member Lisa Cook, setting up a test of the president’s ability to take control of the powerful interest-rate setting body.
The Justice Department on Thursday asked the high court to reverse the decisions of two lower courts that allowed Cook to remain in her position while the broader legal fight is underway. Their decisions enabled Cook to participate in a meeting this week that resulted in a quarter-point reduction in the interest rate.
Trump’s incursion on the Federal Reserve is the culmination of his bid to assume control of all facets of the executive branch, even those intended to be insulated from political pressure or control. The Supreme Court has repeatedly blessed Trump’s efforts to fire the heads of independent agencies and boards, though justices have signaled they view the Federal Reserve as a unique “quasi-private” institution.
Trump’s attempt to fire Cook marks his most significant effort to reshape a central bank board that’s infuriated him with its rate decisions. The president has boasted about how rates will fall once his appointees represent a majority of the Board of Governors. Stephen Miran, Trump’s top economic adviser, took an unpaid leave of absence from the White House and was sworn in earlier this week to serve out the remainder of former Fed Gov. Adriana Kugler’s term.
Still, the rate cut announced by the Fed on Wednesday was much smaller than what Trump has called for, and Federal Reserve Chair Jerome Powell cautioned that tariffs could still cause prices to climb in the coming months, an outcome that may keep the Fed from holding off on future reductions.
Trump attempted to fire Cook last month under a provision of law that permits the president to remove members of the Federal Reserve board for “cause.” He contended that allegations of mortgage fraud — leveled against Cook by his appointee atop the Federal Housing Finance Agency — justified Cook’s summary termination just three years into her 14-year term.
Cook, a Biden appointee, quickly sued, contending that Trump’s allegations against her were a pretext to take control of the board and violated her due process rights. U.S. District Judge Jia Cobb agreed, finding that Cook could only be removed for misconduct committed during her service on the board, not allegations that pre-dated her tenure. Cobb also found that the administration failed to offer her a meaningful chance to contest the allegations.
But Solicitor General John Sauer said Cobb’s ruling overstepped the court’s ability to second-guess the president’s determination.
“The Federal Reserve Act’s broad ‘for cause’ provision rules out removal for no reason at all, or for policy disagreement,” Sauer wrote. “But so long as the President identifies a cause, the determination of … is within the President’s unreviewable discretion.”
“The President may reasonably determine that interest rates paid by the American people should not be set by a Governor who appears to have lied about facts material to the interest rates she secured for herself — and refuses to explain the apparent misrepresentations,” Sauer wrote.
Cook has denied wrongdoing.
