In a significant development for the Federal Reserve’s independence, Federal Reserve Governor Lisa Cook’s legal team has urged the Supreme Court to maintain the status quo by allowing Cook to remain in office amid her ongoing challenge to President Donald Trump’s attempt to remove her from the board. The legal filing, submitted on Thursday, argues that Cook’s removal without due process would disrupt longstanding norms protecting the Federal Reserve from political interference.
Lisa Cook, appointed by then-President Joe Biden in 2023, is defending her position on the Federal Reserve’s Board of Governors, which features seven members serving staggered 14-year terms. This setup aims to insulate the board from direct political pressures. The legal team asserts that Trump’s attempt to dismiss Cook over alleged mortgage fraud, which purportedly occurred before her appointment, contravenes the Federal Reserve Act’s “for cause” requirement.
Judge Jia Cobb previously ruled in favor of Cook, granting her the right to remain in office while the lawsuit proceeds, citing the likelihood of Cook demonstrating a violation under the Federal Reserve Act. Furthermore, the D.C. Circuit Court has upheld Cobb’s ruling, acknowledging Cook’s probable success on claims of insufficient due process. Despite the ongoing legal contention, Cook has effectively participated in Federal Reserve policy meetings, exemplified by a recent decision to lower interest rates.
The U.S. Solicitor General, representing the Trump administration, filed an appeal to the Supreme Court, emphasizing that Cook, as a senior official, should not require the statutory procedural protections before removal. The administration maintains that presenting cause – the alleged mortgage fraud – is sufficient for dismissal under the current regulatory framework, though Cook refutes these claims as unproven and timed conveniently to follow presidential scrutiny.
The Supreme Court faces increased scrutiny over its forthcoming decisions on the president’s powers to dismiss the heads of independent agencies, with past rulings such as Humphrey’s Executor v. United States possibly informing the court’s stance on such matters. As Cook’s challenge proceeds, her legal team includes Paul Clement, a seasoned former solicitor general, underlining the gravity of the case in determining the balance of power between the executive branch and independent federal agencies.