Appeals Court Blocks Trump From Firing Fed Governor Cook
Appeals court keeps Lisa Cook on board amid rate decision.
An appeals court on Monday rejected President Donald Trump's attempt to oust Federal Reserve Governor Lisa Cook, ensuring her presence for the central bank's pivotal interest rate vote starting Tuesday. The 2-1 ruling found that Cook's due process rights were violated, as the administration failed to give her a chance to respond to allegations of mortgage fraud before her August 25 firing.
The Trump White House is poised to appeal to the Supreme Court in a desperate bid to remove Cook, but barring intervention, the Fed's seven-member board remains intact. No president has ever fired a sitting Fed governor in the central bank's 112-year history, making this an unprecedented assault on its independence. Senate Republicans confirmed Trump's nominee Stephen Miran to another board seat on Monday, but Cook's spot is secure for now.
The Federal Open Market Committee, comprising all seven governors and 12 regional bank presidents, will decide on rates Tuesday and Wednesday. Twelve members vote: the governors plus five rotating presidents. Chair Jerome Powell hinted last month at a quarter-point cut from 4.3% to 4.1%, a move already easing mortgage and auto loan rates.
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Trump accused Cook of fraud for allegedly claiming two properties as primary residences in 2021 to secure better mortgage terms before joining the Fed in 2022. Cook denies the claims and faces no charges. Documents show she labeled her Atlanta condo a "vacation home" and "2nd home," contradicting the allegations. U.S. District Judge Jia Cobb ruled last week the firing violated the "for cause" requirement, limited to in-office misconduct.
Legal experts warn this could undermine the Fed's autonomy, allowing political pressure to keep rates artificially low and fuel inflation. Trump has lambasted Powell and the board for not slashing rates faster, pushing for a 1.3% level that economists deem reckless.
Cook, the first Black woman Fed governor, is a Marshall Scholar with degrees from Oxford and Spelman, and prior roles at Michigan State and Harvard. Miran, White House economic adviser, will serve unpaid leave while keeping his job—a rare dual role.The saga highlights Trump's quest to bend the Fed to his will, risking economic stability as markets eye the vote.
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