A federal judge in Washington D.C. has issued a temporary ruling that prevents President Trump from firing Federal Reserve Governor Lisa Cook. This decision, made late Tuesday night, is a significant setback for Trump's attempts to exert greater control over the central bank amidst ongoing debates about economic policy and interest rates.
Federal District Judge Jia Cobb granted a preliminary injunction in favor of Cook, determining that Trump's efforts to remove her likely violated the Federal Reserve Act. This law is designed to protect the independence of the central bank from political interference, stipulating that Federal Reserve governors can only be dismissed for just cause. Judge Cobb asserted that for a dismissal to be warranted, the cause must be substantiated and typically linked to misconduct while in office.
Trump's rationale for seeking Cook's termination stemmed from unproven allegations that she had submitted false statements on a mortgage application in 2021, prior to her appointment to the Fed's board. In her ruling, Judge Cobb also highlighted that Trump's actions likely infringed upon Cook's right to due process and emphasized that her firing could lead to irreparable harm.
Cook's attorney, Abbe Lowell, commented on the ruling, stating that it reaffirms the necessity of protecting the Federal Reserve's independence from unlawful political meddling. Lowell warned that allowing the President to remove Cook based on vague and unsubstantiated claims would jeopardize the stability of the financial system and undermine the rule of law.
In a social media post last month, Trump publicly expressed his intent to fire Cook, marking it as yet another attack on the Federal Reserve as he pressures the central bank to lower interest rates more swiftly. Despite Trump's efforts, Cook remains in her position at the Fed as legal proceedings continue.
Trump's ongoing criticisms of the Federal Reserve and his attempt to dismiss Cook have raised alarm over the independence of the central bank. The Fed has traditionally operated with autonomy in setting interest rates, a crucial factor in influencing both the U.S. and global economies. Trump's actions appear to signal a desire to reshape the central bank's governing board to reflect his economic priorities.
Following the unexpected resignation of Adriana Kugler in August, Trump has the opportunity to appoint a new member to the Fed's governing board. He has nominated Stephen Miran, a White House economic adviser, to temporarily fill Kugler's position. Miran recently attended his Senate confirmation hearing and is now awaiting a vote on his appointment.
By attempting to remove Cook, Trump aims to create a second vacancy that he could fill, potentially leading to a board composed predominantly of his appointees. Notably, two Fed governors appointed by Trump during his first term dissented from their colleagues and voted in favor of a rate cut in the last Fed meeting held in July, further illustrating the ongoing tensions between the White House and the central bank.
