A federal appeals court has ruled that Lisa Cook will retain her position as a Federal Reserve governor, rebuffing attempts by the Trump administration to remove her from office. This decision comes on the eve of a crucial vote on interest rates by the Federal Reserve’s policy-making committee.
The White House is expected to appeal this ruling to the Supreme Court in what appears to be a final effort to unseat Governor Cook before the Fed’s meeting commences. It’s important to note that Cook’s own lawsuit to permanently block her dismissal is still pending in the lower courts.
This marks an unprecedented attempt to alter the composition of the Fed’s seven-member governing board, an institution designed to operate with considerable independence from political pressures. According to reliable sources, no sitting Fed governor has been removed by a president in the agency’s 112-year history.
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This situation raises important questions about the Federal Reserve’s autonomy. Economists generally advocate for independent central banks, arguing that such institutions can more readily implement potentially unpopular policies, such as raising interest rates to combat inflation, without the constraints faced by elected officials.
The evidence suggests that the case against Governor Cook stems from allegations made by Trump appointee Bill Pulte, who has accused her of mortgage fraud. These claims relate to Cook apparently declaring two properties as “primary residences” in July 2021, before her appointment to the Fed board. It should be noted that Cook has denied these charges.