The decision by the US Court of Appeals for the District of Columbia Circuit means the administration has only hours to appeal to the US Supreme Court if it hopes to block Cook from attending the Fed’s policy meeting on Tuesday and Wednesday, according to Reuters.
AUnited States Appeals Court has blocked President Donald Trump’s attempt to fire Federal Reserve Governor Lisa Cook, marking the first time a president has pursued such action since the central bank’s founding in 1913.
The decision by the US Court of Appeals for the District of Columbia Circuit means the administration has only hours to appeal to the US Supreme Court if it hopes to block Cook from attending the Fed’s policy meeting on Tuesday and Wednesday, according to Reuters.
The court ruled 2-1 in favour of Cook, with Circuit Judges Bradley Garcia and J. Michelle Childs, both appointed by President Joe Biden, in the majority.
Circuit Judge Gregory Katsas, a Trump appointee, dissented.
Garcia wrote that Cook is likely to prevail on her claim that she has been denied due process in violation of the US Constitution’s Fifth Amendment.
“Before this court, the government does not dispute that it provided Cook no meaningful notice or opportunity to respond to the allegations against her,” Garcia noted.
Trump’s claims that Cook committed mortgage fraud before taking office, which Cook denies, were deemed insufficient grounds for removal under the law that created the Fed by US District Judge, Jia Cobb, on September 9.
The Fed has asked the courts for a swift resolution of the matter and will abide by any court ruling.
Meanwhile, the Senate has narrowly confirmed Trump’s nominee, Stephen Miran, to a recently vacated seat on the Fed board with a 48-47 vote, allowing him to potentially participate in this week’s rate-setting meeting alongside Cook.
In setting up the Fed, the Congress included provisions to shield the central bank from political interference. Under the law that created the Fed, its governors may be removed by a president only “for cause,” though the law does not define the term nor establish procedures for removal. No president has ever removed a Fed governor, and the law has never been tested in court.
In Monday’s opinion, Garcia wrote that because Cook’s due process claim was “very likely meritorious”, there was no need for the court to address the meaning of ‘for cause’ at this point in the case.
Cook, the first Black woman to serve as a Fed governor, sued Trump and the Fed in late August. Cook has said the claims did not give Trump the legal authority to remove her and were a pretext to fire her for her monetary policy stance.
The Trump administration has argued that the president has broad discretion to determine when it is necessary to remove a Fed governor, and that courts lack the power to review those decisions.
The case has ramifications for the Fed’s ability to set interest rates without regard to the wishes of politicians, widely seen as critical to any central bank’s ability to function independently to carry out tasks such as keeping inflation under control.
Trump this year has demanded that the Fed cut rates aggressively, berating Fed Chair Jerome Powell for his stewardship over monetary policy.
The Fed, focusing on fighting inflation, has not done so, though it is expected this week to make a cut.
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