The Trump administration asked a federal appeals court Thursday to lift a ruling that blocked President Trump from firing Federal Reserve Governor Lisa Cook, in time for a crucial meeting next week when Fed officials will decide whether to lower interest rates.
Mr. Trump moved to fire Cook from the Federal Reserve’s powerful Board of Governors last month, accusing her of falsely claiming two different homes as her principal residence in mortgage documents. U.S. District Judge Jia Cobb blocked the firing on Tuesday, concluding that the president “has not stated a legally permissible cause for Cook’s removal.” Under federal law, Fed board members serve for 14-year terms and can only be removed “for cause.”
On Thursday, the Trump administration asked the U.S. Court of Appeals for the D.C. Circuit to stay that ruling while the government appeals it. The Justice Department argued that the president has broad discretion to remove federal officials, including to decide whether “cause” exists, and courts have — at most — extremely narrow authority to review those decisions.
“Here, the evidence—which Cook has yet to offer contrary explanation for—was that she applied for two loans for her personal benefit, and was able to obtain favorable interest rates by misrepresenting where she lived,” the government argued Thursday. “Regardless of whether that misconduct occurred before or during office, it indisputably calls into question Cook’s trustworthiness and whether she can be a responsible steward of the interest rates and economy for the whole Nation.”
Those allegations surfaced in a letter from Federal Housing Finance Agency Director Bill Pulte, a Trump appointee who cited mortgage papers for homes that Cook bought in Georgia and Michigan in 2021. Abbe Lowell, an attorney representing Cook, called the government’s accusations “unsubstantiated and vague.”
The government requested that the appeals court act by the end of the day on Monday, noting that the Federal Open Market Committee, or FOMC, is set to meet on Tuesday and Wednesday.
Cook’s attorneys asked the appellate court to deny the Trump administration’s request, calling it “wholly unwarranted.”
“An administrative stay would threaten Governor Cook’s participation in next week’s meeting and potentially plunge the FOMC’s vote into turmoil,” Cook’s attorneys wrote in court papers. “In addition, it has the real potential of impacting domestic and foreign markets. The Government has provided no justification for such a grave disruption of the status quo.”
Why does the Fed committee matter?
The Federal Open Market Committee — which includes Cook, Federal Reserve Chair Jerome Powell and 10 other top central bank officials — is responsible for setting the Fed’s interest rate targets, which have a major impact on economic growth, inflation and borrowing costs. The panel typically acts independently, with little input from elected officials.
The committee has voted to leave interest rates relatively high so far this year, but investors and economists widely expect it to reduce rates at next week’s meeting. Rate cuts could lead to stronger economic growth, but at the risk of causing inflation to heat up.
Mr. Trump has tangled with the Fed for months over its decision to keep rates steady, nicknaming Powell “Mr. Too Late” and arguing the rate-setting committee should overrule him. Powell’s term ends in May.
Amid that pressure, Mr. Trump moved to fire Cook in late August. A Biden appointee, Cook’s term on the Fed’s seven-member Board of Governors is set to end in 2038. The allegations against Cook are not related to Mr. Trump’s push against the Fed, but if she is removed from the board, the president could pick her replacement, giving him more influence over the central bank.
