Appeals court says Trump can’t remove Federal Reserve’s Lisa Cook

Chair of the Federal Reserve Jerome Powell, left, administers the oath of office to Lisa Cook, right, to serve as a member of the Board of Governors at the Federal Reserve System during a ceremony at the William McChesney Martin Jr. Building of the Federal Reserve May 23, 2022 in Washington, D.C. (Photo by Drew Angerer/Getty Images)

WASHINGTON — An appeals court late Monday rejected the Trump administration’s request to move ahead with firing Federal Reserve board member Lisa Cook, as the president tries to pressure the independent board to lower interest rates. 

The 2-1 decision will allow Cook to partake in Tuesday’s Federal Reserve meeting, where the board will vote on whether to adjust interest rates. 

The Trump administration is likely to appeal the decision to the Supreme Court. 

If Trump is successful in removing Cook and is able to nominate a replacement, he could have a majority of Fed members who are aligned with his desire to lower interest rates to boost the economy.

Trump nominee approved

Cook, appointed by former President Joe Biden, is the first Black woman appointed to the Fed, and she has consistently voted against lowering interest rates since joining the board in 2022. Her term ends in 2038. 

Late Monday, the U.S. Senate also approved Trump’s nominee for an open spot at the Fed, Stephen Miran, in a 48-47 vote.

While the Fed is an independent agency, Miran will continue to serve as the head of the White House’s Council of Economic Advisers.

In a social media post Monday, the president called out Federal Reserve Chair Jerome Powell, and pressed that he “MUST CUT INTEREST RATES, NOW, AND BIGGER THAN HE HAD IN MIND. HOUSING WILL SOAR!!!.”

Appeals court splits

In the appeals court decision on Cook, D.C. Circuit Judge Gregory G. Katsas, whom Trump appointed in 2017, split with Judges J. Michelle Childs and Bradley N. Garcia, both appointed by Biden.

Last week a federal judge ruled to keep Cook in her position, determining that Trump administration allegations of mortgage fraud lacked evidence and did not meet the threshold for removing Cook under “just cause.”

Katsas agreed with the Trump administration’s argument that the president has the right to remove a Fed member for “just cause.” 

“This broad definition ‘give[s] the President more removal authority than other removal provisions’ imposed by Congress or reviewed by the Supreme Court,” Katsas wrote in his dissent. 

Childs and Garcia did not address the “just cause” argument but said the lack of due process Cook received in her removal warranted blocking Trump’s attempt to fire her.  

“Because Cook’s due process claim is very likely meritorious, there is no need to address the meaning of ‘for cause’ in the Federal Reserve Act in this emergency posture,” the majority wrote in the opinion.

A Trump official referred Cook to the Department of Justice, accusing her of improperly filing paperwork about her residence that allowed her to get a more favorable mortgage rate. Reuters obtained Cook’s paperwork and found no evidence of tax rule violations.