The Supreme Court has allowed Lisa Cook Fed Board member to remain in her position temporarily, blocking President Trump’s effort to remove her amid ongoing legal challenges. The decision preserves her seat ahead of a crucial Federal Reserve interest rate vote.
Legal Challenge Protecting Fed Board Independence
The federal appeals court upheld a lower court ruling that firing Cook likely violates the Federal Reserve Act, which restricts removal of Fed governors to “for cause” reasons only. This law aims to shield the central bank from political interference by the White House.
The court’s 2-1 decision came shortly before the Federal Open Market Committee was set to decide on lowering benchmark interest rates, a move President Trump has pressured for more aggressively.
Controversy and Allegations
President Trump announced his intent to fire Cook via social media, citing allegations from Bill Pulte, a political ally who accused Cook of falsifying mortgage application information in 2021. Pulte, who oversees Fannie Mae and Freddie Mac, has made similar accusations against other Democrats, including Senator Adam Schiff and New York Attorney General Letitia James, all of whom have denied wrongdoing.
By law, Fed governors can only be removed for cause, and the courts have so far blocked the president’s attempt to remove Cook without meeting this threshold.
This legal standoff underscores the ongoing tension between the Federal Reserve’s independence and executive branch influence, especially during critical economic decision-making periods.