Trump blocked from dismissing Fed governor Lisa Cook during proceedings
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The news: A US judge has ruled that President Donald Trump cannot remove Federal Reserve governor Lisa Cook while litigation challenging her dismissal plays out.
The context: Late on Tuesday night in Washington, US District Court judge Jia Cobb wrote that “The public interest in Federal Reserve independence weighs in favor of Cook’s reinstatement,” granting the Governor a preliminary injunction to block her removal.
Cobb said that “Cook has made a strong showing that her purported removal was done in violation of the Federal Reserve Act’s ‘for cause’ provision.”
In late August, Cook filed a lawsuit challenging President Donald Trump’s efforts to fire her, igniting an unprecedented legal battle over the independence of the central bank.
Cobb wrote that “the best reading” of the ‘for cause’ provision is that legal cause for removing a Fed governor is limited to actions related to their “behavior in office.”
Trump moved to fire Cook over allegations that she committed mortgage fraud before the joined the Fed, which were first levelled at her by Federal Housing Finance Agency director Bill Pulte. Cook denies the allegations.
″‘For cause’ thus does not contemplate removing an individual purely for conduct that occurred before they began in office,” the judge wrote.
The Trump administration is set to pursue a quick appeal to the decision, having asked the court to rule quickly on the injunction so it would have time to challenge the decision if necessary before the Fed’s September meeting.
Trump has persistently criticised the Fed and Fed chair Jerome Powell’s monetary policy, pressuring the central bank to cut interest rates, and has made clear his intention to ensure loyalists are appointed to the Fed committee.
The sources: US District Court decision, FT, WSJ, CNBC
