Judge Prevents Trump from Discharging Federal Reserve Governor Lisa Cook
A judge from Washington D.C. has temporarily put a stop to President Trump's attempt to dismiss Lisa Cook, the Governor of the Federal Reserve. This action puts a temporary halt to Trump's vigorous push to extend his authority over the central bank.
Jia Cobb, the Federal District Judge, agreed to a provisional injunction in favor of Cook. The judge's decision was based on the likelihood that the president's attempt to oust Cook could be in violation of the Federal Reserve Act. This particular legislation is designed to protect the central bank from political meddling. It stipulates that Federal Reserve governors can only be ousted "for cause", which typically refers to misconduct during their tenure.
The President's Allegations
President Trump's intention to dismiss Cook was based on unverified claims that she had given false information on a mortgage application in 2021, prior to becoming a member of the Fed's board.
Judge Cobb also determined that there was a high probability that Trump had infringed upon Cook's rights to due process. The judge expressed that dismissing Cook could have "irreparable harm" on her.
"This decision recognizes and reaffirms the need to protect the Federal Reserve's independence from illegal political interference," stated Cook's lawyer, Abbe Lowell. "Permitting the President to unlawfully remove Governor Cook based on unsubstantiated and unfounded allegations could destabilize our financial system and undermine the principle of law."
Trump's Attempt to Fire Cook
Trump revealed his intention to discharge Cook in a social media post last month. This was seen as part of his ongoing onslaught on the Fed in his bid to push the central bank to decrease interest rates more rapidly.
Despite the ongoing court proceedings, Cook has continued to serve at the Fed.
Concerns Regarding the Independence of the Fed
The President's consistent attacks on the Fed, and his efforts to fire Cook have sparked worries about the central bank's independence. The Fed has traditionally functioned autonomously in setting interest rates, independent of any political influence. This is crucial given the impact its decisions have on shaping both the U.S. and global economies.
However, Trump is currently trying to restructure the Fed's seven-member governing board. Following the unexpected resignation of Adriana Kugler in August, Trump now has the chance to appoint a new member to the Fed's governing board. His nominee for the position is Stephen Miran, a White House economic advisor, who is currently awaiting a vote following his Senate confirmation hearing last week. By attempting to remove Cook, Trump was hoping to open up a second vacancy that he could fill.
If he is successful in this endeavor, the majority of the board would be made up of Trump's appointees. Interestingly, during the last Fed meeting in July, two Fed governors who were appointed by Trump during his first term, disagreed with their colleagues and voted for a rate cut.