A federal appeals court rejected Donald Trump’s bid to remove Federal Reserve Governor Lisa Cook on Monday. This marks the first time any president has tried to fire a Fed governor since 1913.
The U.S. Court of Appeals for the District of Columbia Circuit denied the Justice Department’s emergency request. Trump’s administration now has only hours to appeal to the Supreme Court.
The Fed’s policy meeting starts Tuesday and Wednesday. Cook can attend unless the Supreme Court intervenes. The Fed is expected to cut interest rates to help the cooling job market.
White House spokesman Kush Desai said the administration plans to appeal. “The President lawfully removed Lisa Cook for cause,” Desai stated. “The Administration will appeal this decision and looks forward to ultimate victory.”
The appeals court ruled 2-1 against Trump’s request. Judges Bradley Garcia and J. Michelle Childs voted in the majority. Both were appointed by Joe Biden. Judge Gregory Katsas, a Trump appointee, dissented.
U.S. District Judge Jia Cobb first blocked Cook’s removal on September 9. Cobb found Trump’s mortgage fraud claims against Cook were likely insufficient grounds for removal. Cook denies these allegations.
Garcia wrote that Cook would likely win her due process claim. “The government does not dispute that it provided Cook no meaningful notice or opportunity to respond,” Garcia noted.
Cook became the first Black woman to serve as a Fed governor. She sued Trump and the Fed in late August. Cook argues the fraud claims are a pretext to remove her over policy disagreements.
The Trump administration claims broad power to remove Fed governors. They argue courts cannot review these presidential decisions. Legal experts say this threatens the Fed’s independence from political pressure.
Congress created the Fed with special protections in 1913. Governors can only be removed “for cause,” though the law doesn’t define this term. No procedures exist for removal either. No president has ever fired a Fed governor before.
The case could affect the Fed’s ability to set rates without political interference. This independence is seen as crucial for controlling inflation and managing the economy effectively.
Trump has publicly demanded aggressive rate cuts this year. He has criticized Fed Chair Jerome Powell for not cutting rates quickly enough. The Fed has focused on fighting inflation instead of cutting rates quickly.
The Supreme Court has let Trump remove officials from other independent agencies this year. However, the Court suggested the Fed is different from other executive branch agencies in a May order.
The Court called the Fed “a uniquely structured, quasi-private entity” with special historical traditions. This distinction may protect Cook more than other officials Trump has removed.
The administration asked for quick action to remove Cook before this week’s meeting. Government lawyers said firing Cook would “strengthen, not diminish, the Federal Reserve’s integrity.”
Cook’s lawyers argued her removal would harm U.S. and foreign markets. They said keeping her in office serves the public interest better than Trump’s control efforts.
Judge Katsas disagreed in his dissent. He said the harm to Trump’s administration outweighed the risk to Cook. “The Board of Governors is important,” Katsas wrote. “That heightens the government’s interest in ensuring Governors are competent.”
Judge Cobb’s original ruling found the 1913 law only allows removal for misconduct while in office. All fraud claims against Cook involve actions before her 2022 Senate confirmation.
Trump and housing official William Pulte claim Cook lied on three mortgage applications. They say this could have gotten her lower rates and tax credits illegally.
However, documents reviewed by Reuters may support Cook’s defense. A loan estimate shows Cook declared an Atlanta property as a “vacation home.” This appears to contradict the allegations against her.
Ann Arbor, Michigan tax authorities also found no rule violations. Cook had declared a Michigan home as her primary residence. The city reviewed her property records at Reuters’ request.
The Justice Department has opened a criminal investigation into Cook. Grand jury subpoenas were issued in Georgia and Michigan, according to sources and documents seen by Reuters.
The Senate confirmed Trump’s Fed nominee Stephen Miran Monday night. The 48-47 vote was largely along party lines. Miran will likely join Cook at this week’s rate-setting meeting.
Cook’s case represents a major test of Fed independence. The outcome could reshape how future presidents interact with the central bank. Markets are watching closely as the legal battle continues.
The Fed has asked courts for a quick resolution. Officials say they will follow any court ruling. The central bank has not taken legal positions in the case.
This dispute comes as the Fed faces pressure over inflation and employment. Rate decisions typically reflect economic data rather than political preferences. The Cook case tests whether this tradition will survive.
