Washington — The Supreme Court on Wednesday said it will hear arguments in January on whether President Trump can fire Lisa Cook from her position on the Federal Reserve Board of Governors.
The high court said in a brief unsigned order that it is not yet acting on Mr. Trump’s request for emergency relief. The Trump administration asked the Supreme Court last month to freeze a lower court order that found Cook’s purported removal was likely illegal and allowed her to remain a Fed governor.
By deferring a decision on the president’s bid for emergency relief, Cook can remain in her position on the Fed’s Board of Governors for now.
Cook participated in a two-day meeting of the Fed’s interest-rate-setting committee last month, which culminated with the central bank announcing its first cut to its benchmark interest rate in nine months. The panel will meet next in October and December.
Her lawyers warned the Supreme Court that allowing Mr. Trump to remove Cook from the board of governors even for a brief period would have severe consequences, risking chaos and disruption of financial markets.
Accepting the president’s argument, Cook’s lawyers said, “would eviscerate the Federal Reserve’s longstanding independence, upend financial markets, and create a blueprint for future presidents to direct monetary policy based on their political agendas and election calendars.”
But they warned it would also open the Fed up to political influence. Granting Mr. Trump the emergency relief he sought would “sound the death knell” for the Fed’s independence” and transform it into a body that is “subservient to the President’s will,” Cook’s lawyers wrote.
Mr. Trump’s attempt to fire Cook from the Fed board in August and her subsequent lawsuit arguing the removal broke the law set up a major test of his authority to oust key officials at the central bank. The president has criticized the Fed for not lowering interest rates sooner and is seeking to put his stamp on the seven-member board.
The Senate confirmed Stephen Miran, an adviser to Mr. Trump, to the board of governors last month. Miran chaired the White House’s Council of Economic Advisers and is taking an unpaid leave of absence from that job while serving on the Fed board, an unusual move.
Mr. Trump’s efforts to oust Cook are unprecedented, as no president has attempted to remove a sitting Fed governor in the central bank’s 112-year-history. Critics of the move have warned that the effort harms the Fed’s independence and could destabilize markets.
In announcing his decision to fire her, the president claimed Cook made misrepresentations on mortgage documents in 2021, before she was appointed to the board of governors, by claiming two different properties in Ann Arbor, Michigan, and Atlanta as her principal residence in order to gain more favorable lending terms.
Cook’s lawyers have said she “did not ever commit mortgage fraud,” and she has not been charged with any wrongdoing. They called the allegations “flimsy” and “unproven.” Reuters reported that a loan estimate for the property in Atlanta, dated May 28, 2021, showed that Cook declared that residence as a “vacation home.”
But Mr. Trump said the alleged misstatements gave him “sufficient cause” to remove Cook from the Fed board.
“That the Federal Reserve Board plays a uniquely important role in the American economy only heightens the government’s and the public’s interest in ensuring that an ethically compromised member does not continue wielding its vast powers,” Solicitor General D. John Sauer wrote in a request for emergency relief to the Supreme Court.
He continued: “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 — and refuses to explain the apparent misrepresentations.”
U.S. District Judge Jia Cobb ruled last month that Mr. Trump’s attempt to fire Cook likely violated federal law because he did not state a legally permissible cause for her removal. The judge said the president’s reason for ousting Cook rests on alleged actions before she joined the Fed board, and found the requirement that Fed governors can only be removed “for cause” covers only conduct while in-office.
Cook joined the Fed board in 2022 and was reappointed by President Biden to a 14-year-term that is set to end in 2038.
Cobb also ruled that Cook’s due process rights were likely violated because she did not receive notice and an opportunity to be heard before her removal.
The Trump administration appealed the district judge’s decision to the U.S. Court of Appeals for the District of Columbia Circuit, which voted 2-1 to decline its request to let Mr. Trump fire Cook.
The two-judge majority agreed that Cook did not receive adequate process before her removal. It did not address whether Mr. Trump satisfied the “for cause” removal requirement.
In its emergency appeal to the Supreme Court, the Trump administration said it is not challenging the constitutionality of the for-cause removal restriction for Fed governors enacted by Congress.
But Cook’s lawyers said there must be “some meaningful check” on the president’s ability to remove her.
“Otherwise, any president could remove any governor based on any charge of wrongdoing, however flawed,” they wrote in a Supreme Court filing. “That regime is not what Congress envisioned when it protected the Federal Reserve Board from presidential control. That regime is not what this Court envisioned when it went out of its way to single out the Board as a unique institution with a unique history of independence.”
Cook is one of several Democratic-appointed officials at independent agencies that Mr. Trump has moved to fire since returning to the White House. The Supreme Court has so far allowed the president to oust members of the National Labor Relations Board, Merit Systems Protection Board, Consumer Product Safety Commission and Federal Trade Commission without cause.
It will hear arguments in December on the constitutionality of removal protections for FTC commissioners and whether to overturn a key 1935 decision that allowed Congress to insulate certain independent agencies from political pressure. The case tests the scope of the president’s removal authority.
But the high court in May suggested the Fed is different from those agencies because it is a “uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States.”