The White House says it will appeal a court decision blocking President Donald Trump’s attempt to oust Federal Reserve Governor Lisa Cook — ratcheting up a legal fight with major implications for the US central bank.
“The president lawfully removed Lisa Cook for cause,” Kush Desai, a White House spokesperson, said in a statement. “The administration will appeal this decision and looks forward to ultimate victory on the issue.”
With the Fed set to meet on Tuesday, it wasn’t immediately clear if the White House would make a last-ditch effort in the courts to stop Cook from attending. As of Tuesday morning, there was no indication that they’d asked the US Supreme Court to intervene overnight.
The divided appeals court in Washington late Monday affirmed that Cook can continue working while her lawsuit challenging Trump’s move to dismiss her proceeds. The 2-1 ruling came just hours before Tuesday’s start of the Fed’s highly anticipated two-day meeting to vote on interest rates.
Cook sued Trump last month after the president moved to oust her over allegations of mortgage fraud, which she denies. The lawsuit has emerged as a major flash-point in the growing clash between the White House and the Fed, which has resisted Trump’s demands to lower interest rates.
US District Judge Jia Cobb on Sept. 9 ruled that Cook could remain on the job as her case proceeded, saying that Trump’s attempt to oust her likely violated the law. The appeals court decision allows that ruling to stand for now.
See also: Trump can’t fire Cook before Fed meeting, appeals court says
The Fed declined to comment on the appeals court ruling. Representatives of Cook didn’t respond to requests for comment on Monday’s decision.
Cook declined to comment on the White House statement that it plans to appeal.
Shaping the Fed
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The Fed hasn’t taken a side in the legal fight over Trump’s attempt to oust Cook and has said it will respect the court’s decision.
As Cook fights to stay in her position, Trump’s economic adviser Stephen Miran is on his way to joining the Federal Reserve board after the Senate confirmed him to the post in a vote Monday evening. He’ll fill a seat recently vacated by former Fed Governor Adriana Kugler.
Republicans fast-tracked approval of Miran’s nomination with Trump pressuring the central bank to cut interest rates.
Investors and economists surveyed by Bloomberg expect Fed officials to lower rates by a quarter percentage point on Wednesday. Undeterred, Trump predicted a “big cut” from the central bank.
The rate decision, however, could reveal growing divisions among policymakers over the right direction for monetary policy. Miran and two other officials previously appointed by Trump are expected by some Fed watchers to dissent in favor of a bigger reduction. Other officials could well dissent in the opposite direction, favoring no cut at all.
Trump said last month he was firing Cook after Federal Housing Finance Agency Director Bill Pulte accused her of fraudulently listing homes in Michigan and Georgia as a “primary residence” when she obtained mortgages in 2021 to secure more favorable terms on loans. Pulte later added a claim involving a third mortgage in Massachusetts.
Fed Independence
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Cook had told the court that allowing Trump to dismiss her while the case proceeds would cause lasting damage to the Fed’s independence and undermine the US economy. Trump argued that his decision about what constitutes “cause” to fire Cook cannot be reviewed by the courts, and that the allegations against her are enough evidence that she can’t be trusted to help guide the US economy.
Cook’s lawyer Abbe Lowell said in a filing last week that any ruling that threatens her attendance at the Fed meeting would “potentially plunge” the board’s vote “into turmoil” and would have “the real potential of impacting domestic and foreign markets.”
The judges didn’t address the underlying claims of mortgage fraud against Cook, and also did not reference reports over the weekend that loan documents for Cook’s Georgia home appear to contradict Pulte’s claim, showing that she told the lender the property was a vacation home.
In their decision on Monday, DC Circuit Judges J. Michelle Childs and Bradley Garcia, both appointed by former President Joe Biden, voted to reject the administration’s request to let Trump remove Cook from her position while the case goes forward. Judge Greg Katsas, appointed by Trump in his first term, dissented.
The court held that the district judge was correct to find that Trump likely violated Cook’s due process rights by attempting to fire her via a social media post.
‘Minimal Process’
“In this court, the government does not dispute that it failed to provide Cook even minimal process — that is, notice of the allegation against her and a meaningful opportunity to respond — before she was purportedly removed,” Garcia, joined by Childs, wrote.
Garcia wrote that he believed Cook was at least likely to win on her claim that Trump and other US officials who played a role in trying to oust her failed to provide her with due process — enough notice and an opportunity to object. Garcia didn’t address the lower court judge’s other finding that Trump’s purported reasons for trying to fire Cook failed to meet the standard of “cause” required to remove a Fed governor under US law.
Garcia also wrote that siding with Trump at this stage would be far more disruptive, given the fact that Cook had continued to perform her duties up until now. Garcia said the government had modern due process precedent “stacked against it.”
Katsas said that he didn’t believe a stay was warranted because the alleged harm to Cook wasn’t irreparable. He said she could always get her back pay returned to her if she ended up ultimately winning the case.
