A federal appeals court has rejected President Donald Trump’s bid to quickly fire Federal Reserve board member Lisa Cook, leaving the president just hours to ask the Supreme Court to oust her before a critical interest-rate setting meeting kicks off Tuesday morning.
The 2-1 ruling Monday by a panel of the D.C. Circuit Court of Appeals is unlikely to be the last word on the matter, given the anticipated Supreme Court action. But it sets up a race against the clock to determine whether Cook, a Biden appointee who Trump tried to fire last month, will participate in the Fed meeting set to begin Tuesday.
Judges J, Michelle Childs and Bradley Garcia, both Biden appointees, voted to leave Cook in her post, while Judge Gregory Katsas, a Trump appointee, dissented.
The Department of Justice declined comment.
Last week, U.S. District Judge Jia Cobb rejected Trump’s bid to remove Cook just three years into her 14-year term, saying the president’s justification for the firing — mortgage fraud allegations that have not been adjudicated in any forum — did not meet the legal requirements to overcome laws protecting the independence of the Federal Reserve.
While the Supreme Court has repeatedly endorsed Trump’s efforts to remove executive branch officials Congress has sought to insulate from politics, the justices have signaled they view the Federal Reserve as a unique “quasi-private” institution that may put it in a different legal category.
Federal law gives Trump the power to fire members of the Federal Reserve Board of Governors “for cause,” which typically means misconduct or malfeasance on the job. Trump said he had cause to fire Cook due to allegations that she claimed in separate mortgage applications that two different homes were her primary residence, which can entitle a homeowner to lower rates. Cook has denied the allegations.
The D.C. Circuit’s majority said there was “no need” at this stage of the case for the appeals court to address whether the allegations against Cook meet the “for cause” standard to fire a Fed member or what that standard would require. Childs and Garcia agreed with Cobb’s finding that Cook’s due process rights appeared to have been violated because she wasn’t properly notified of the accusations against her and given a chance to dispute them.
In his dissent, Katsas grappled directly with the definition of “for cause” firing protections for Federal Reserve board members, concluding that the law gives the president broad power to define the “cause.”
“The Board of Governors no doubt is important, but that only heightens the government’s interest in ensuring that its Governors are competent and capable of projecting confidence into markets,” Katsas wrote. “And in empowering the President to remove Governors for cause, Congress has specifically assigned that task to the President.”
Delving into the president’s determination of cause, Katsas wrote, “would enable a potentially compromised Governor to engage in significant governmental action — such as voting on whether to adjust interest rates, which Cook says she must do tomorrow.”
The Trump administration’s expected emergency appeal will go to Chief Justice John Roberts, who oversees such appeals out of the D.C. Circuit. He’s all but certain to escalate the issue to the full court, but could issue a temporary order blocking Cook from remaining in her post while the litigation plays out.
Roberts has issued similar temporary “administrative” orders in recent months in two other cases involving Trump’s bids to dismiss Biden appointees.
Last week, the chief justice blocked a ruling that would’ve kept Federal Trade Commission member Rebecca Slaughter in her post. The issue remains pending at the high court.
And, in April, Roberts stayed a D.C. Circuit decision allowing National Labor Relations Board member Gwynne Wilcox and Merit Systems Protection Board member Cathy Harris to remain on the job despite Trump’s attempts to fire them. The following month, the full Supreme Court ruled on the issue and, in an apparent 6-3 decision, put Harris and Wilcox out of their posts pending the outcome of their lawsuits over the dismissals.
