The Federal Reserve issued a statement on Tuesday indicating its willingness to comply with any court ruling regarding President Donald Trump's authority to remove Board of Governors member Lisa Cook. The Fed's spokesperson noted that Cook has communicated through her attorney that she intends to challenge this decision in court, aiming to secure a judicial ruling that affirms her position as a Senate-confirmed member of the Board of Governors of the Federal Reserve System.
This statement marked the Fed's initial response to Trump's announcement made on Monday night, wherein he declared his intention to remove Cook from her role due to allegations of mortgage fraud. While the spokesperson refrained from directly criticizing Trump’s actions, the statement emphasized that the Federal Reserve Act mandates fixed terms for governors, and they can only be removed by the president for just cause. This framework is designed to protect the integrity of monetary policy decisions, ensuring they are grounded in data and the long-term interests of the American public.
In a separate statement to reporters on Tuesday, Trump affirmed his commitment to respect any court decision regarding Cook's status at the Fed. “I abide by the court, yeah, I abide by the court,” he stated, while also expressing optimism that the Fed's board would soon be predominantly comprised of his appointees after selecting a replacement for Cook. A shift in the board’s composition could potentially aid Trump in achieving his goal of significantly lowering interest rates, a demand he has consistently made.
Should Cook proceed with a federal court challenge against her removal, it is anticipated that the matter could ultimately reach the Supreme Court, which would provide a final verdict on the dispute. The spokesperson for the Fed reiterated that the institution was created by Congress to fulfill its statutory responsibilities, which include promoting maximum employment, maintaining stable prices, and ensuring a well-functioning financial system. “The Federal Reserve will continue to carry out its duties as established by law,” the spokesperson stated, emphasizing the organization’s commitment to transparency, accountability, and independence.
Lisa Cook's attorney, Abbe Lowell, asserted on Tuesday that Trump lacks the authority to terminate Cook's position. He characterized Trump’s attempt to remove her as devoid of factual or legal justification, stating, “We will be filing a lawsuit challenging this illegal action.” Cook herself expressed her determination to continue her work at the Fed, despite Trump's claims regarding his powers of removal.
As of Tuesday, the Federal Reserve did not respond to inquiries from CNBC regarding Cook's presence at the central bank's headquarters in Washington, D.C., or whether she was working remotely. The unfolding situation highlights the ongoing tension between the executive branch and the Federal Reserve, as well as the complexities of governance within the financial system.
For further updates on this developing story, stay tuned as the legal proceedings and their implications for the Federal Reserve and monetary policy unfold.
