Trump Seeks Supreme Court Intervention in Fed Governor’s Dismissal

WASHINGTON, Sept. 18 (Reuters) – President Donald Trump‘s administration is asking the Supreme Court to allow him to remove Federal Reserve Governor Lisa Cook. This unprecedented move could jeopardize the independence of the central bank, which has existed since 1913.

The Justice Department filed a request to lift a recent ruling from U.S. District Judge Jia Cobb, who temporarily blocked Trump from dismissing Cook. Cobb ruled that Trump’s claims of mortgage fraud against Cook likely did not meet the legal threshold for removal.

“This application involves yet another case of improper judicial interference with the President’s removal authority,” the Justice Department argued. Cook participated in the Fed’s two-day meeting earlier this week, where the bank voted to cut interest rates by a quarter of a percent due to concerns about the job market.

In a recent 2-1 decision, the U.S. Court of Appeals for the District of Columbia Circuit denied the administration’s request to put Cobb’s order on hold, prompting Trump to seek Supreme Court review. Under the law creating the Fed, governors may only be removed for cause, a term which is not defined. No president has ever removed a Fed governor.

Cook, who is the first Black woman to serve on the Fed’s board, filed a lawsuit against Trump in August, claiming his allegations were groundless and served as a pretext for dismissal due to her monetary policy stance.

The Justice Department argued in its filing that the President has broad discretion to remove a Fed governor if a cause is identified. The filing stated, “Put simply, the President may reasonably determine that interest rates paid by the American people should not be set by a Governor who appears to have lied about facts material to the interest rates she secured for herself.”

Concerns about the Fed’s independence are significant, especially regarding its ability to manage interest rates without political influence. Trump’s demands for aggressive rate cuts have drawn criticism, and he has publicly labeled Fed Chair Jerome Powell negatively.

The Supreme Court’s conservative majority may respond favorably to Trump’s arguments. However, they have also indicated a distinction between the Fed and other agencies in previous rulings, recognizing its unique structure and historical context.

Cook’s troubles extend beyond the Fed, as the Justice Department has also issued grand jury subpoenas related to her mortgage agreements.

As this legal battle unfolds, both the independence of the Federal Reserve and Trump’s authority as President are thrust into the spotlight.