Chair of the Federal Reserve Jerome Powell, left, administers the oath of office to Lisa Cook, right, to serve as a member of the Board of Governors at the Federal Reserve System during a ceremony at the William McChesney Martin Jr. Building of the Federal Reserve May 23, 2022 in Washington, D.C. (Photo by Drew Angerer/Getty Images)

WASHINGTON — An appeals court late Monday rejected the Trump administration’s request to move ahead with firing Federal Reserve board member Lisa Cook, as the president tries to pressure the independent board to lower interest rates. 

The 2-1 decision will allow Cook to partake in Tuesday’s Federal Reserve meeting, where the board will vote on whether to adjust interest rates. 

The Trump administration is likely to appeal the decision to the Supreme Court. 

If Trump is successful in removing Cook and is able to nominate a replacement, he could have a majority of Fed members who are aligned with his desire to lower interest rates to boost the economy.

Trump nominee approved

Cook, appointed by former President Joe Biden, is the first Black woman appointed to the Fed, and she has consistently voted against lowering interest rates since joining the board in 2022. Her term ends in 2038. 

Late Monday, the U.S. Senate also approved Trump’s nominee for an open spot at the Fed, Stephen Miran, in a 48-47 vote.

While the Fed is an independent agency, Miran will continue to serve as the head of the White House’s Council of Economic Advisers.

In a social media post Monday, the president called out Federal Reserve Chair Jerome Powell, and pressed that he “MUST CUT INTEREST RATES, NOW, AND BIGGER THAN HE HAD IN MIND. HOUSING WILL SOAR!!!.”

Appeals court splits

In the appeals court decision on Cook, D.C. Circuit Judge Gregory G. Katsas, whom Trump appointed in 2017, split with Judges J. Michelle Childs and Bradley N. Garcia, both appointed by Biden.

Last week a federal judge ruled to keep Cook in her position, determining that Trump administration allegations of mortgage fraud lacked evidence and did not meet the threshold for removing Cook under “just cause.”

Katsas agreed with the Trump administration’s argument that the president has the right to remove a Fed member for “just cause.” 

“This broad definition ‘give[s] the President more removal authority than other removal provisions’ imposed by Congress or reviewed by the Supreme Court,” Katsas wrote in his dissent. 

Childs and Garcia did not address the “just cause” argument but said the lack of due process Cook received in her removal warranted blocking Trump’s attempt to fire her.  

“Because Cook’s due process claim is very likely meritorious, there is no need to address the meaning of ‘for cause’ in the Federal Reserve Act in this emergency posture,” the majority wrote in the opinion.

A Trump official referred Cook to the Department of Justice, accusing her of improperly filing paperwork about her residence that allowed her to get a more favorable mortgage rate. Reuters obtained Cook’s paperwork and found no evidence of tax rule violations. 

Federal Reserve Chair Jerome Powell administers the oath of office to Lisa Cook to serve as a member of the Board of Governors at the Federal Reserve System during a ceremony at the William McChesney Martin Jr. Building of the Federal Reserve May 23, 2022, in Washington, D.C. (Photo by Drew Angerer/Getty Images)

WASHINGTON — The Trump administration made public Wednesday its plans to appeal a lower court ruling that keeps Federal Reserve governor Lisa Cook on the independent central bank’s board, for now.  

In a 49-page opinion released late Tuesday, U.S. District Judge Jia M. Cobb wrote that President Donald Trump “violated the Federal Reserve Act because (Cook’s) purported removal did not comply with the statute’s ‘for cause’ requirement” and that his attempts to remove Cook from the board “deprived her of procedural rights guaranteed by the U.S. Constitution.”

Trump said in late August that he wanted to remove Cook, the first Black woman to serve on the Federal Reserve Board, alleging she falsified some information in a mortgage application. 

Cook’s attorneys filed a lawsuit in federal court a few days later, arguing that Trump’s attempts were political and violated her due process rights. 

Trump’s targeting of Cook comes amid his pressure campaign on Federal Reserve Board Chair Jerome Powell to lower interest rates. 

Trump, who has been angling for more influence over the central bank, swiftly nominated his adviser Stephen Miran to fill a separate vacancy on the board ahead of the Fed’s meeting next week where members are widely expected to lower rates.

U.S. Senate Republicans advanced Miran’s nomination out of committee Wednesday morning. Miran is the chair of the White House Council of Economic Advisers.

Ruling seen as affirming Fed independence

Cobb said the case marks the first time in the Federal Reserve’s 111-year history that a president has sought to remove one of its members “for cause.”

The Federal Reserve Act doesn’t actually define what “for cause” entails, but Cobb wrote that reasons for firing under the law “are limited to grounds concerning an official’s behavior in office and whether they have been faithfully and effectively executing statutory duties. 

“The ‘for cause’ standard thus does not contemplate removing an individual purely for conduct that occurred before they assumed the position.”

Cook’s attorney’s Abbe David Lowell, of Lowell and Associates, and Norm Eisen, head of the advocacy organization Democracy Defenders Fund, hailed the district court injunction.

“The court’s ruling recognizes and reaffirms the importance of safeguarding the independence of the Federal Reserve from illegal political interference,” Lowell and Eisen said in a statement Wednesday morning. 

“Allowing the president to unlawfully remove Governor Cook on unsubstantiated and vague allegations would endanger the stability of our financial system and undermine the rule of law. Governor Cook will continue to carry out her sworn duties as a Senate-confirmed Board Governor member.”

Judge Cobb agreed with their assessment that the president seeking to remove Cook represented irreparable harm and that “the public interest in Federal Reserve independence weighs in favor of Cook’s reinstatement.”

Cobb wrote that she “likely cannot directly ‘enjoin the President in the performance of his official duties’ to require him to reappoint Cook.” So she instead issued a preliminary injunction directing Powell “and the Board of Governors to allow Cook to continue to operate as a member of the Board for the pendency of this litigation.”

Attorneys for the Trump administration notified the district court they plan to appeal Cobb’s preliminary injunction to the the United States Court of Appeals for the District of Columbia. 

This story was updated at 4:33 p.m.

Federal Reserve Chair Jerome Powell administers the oath of office to Lisa Cook to serve as a member of the Board of Governors at the Federal Reserve System during a ceremony at the William McChesney Martin Jr. Building of the Federal Reserve May 23, 2022, in Washington, D.C. (Photo by Drew Angerer/Getty Images)

WASHINGTON — A federal judge Friday said she would set an expedited briefing schedule for Federal Reserve Governor Lisa Cook’s challenge to President Donald Trump’s attempted firing of her earlier in the week. 

Cook is aiming to keep her position until her term expires in 2038, arguing that Trump’s attempt to remove her has no legal basis. U.S. District of Columbia Judge Jia M. Cobb, whom former President Joe Biden appointed in 2021, gave Cook until Tuesday to respond to the government’s brief that seeks to justify her removal.

The deadline is part of a fast-tracked briefing process for the case that could test the ability of the Federal Reserve Board to operate independently. If Cook is removed, Trump would select another member of the seven-person panel, likely meaning a majority of the board would align with the president.

The legal challenge is likely to head to the Supreme Court. 

Cook filed a suit against the president Thursday after he posted to social media Monday that he would fire her over allegations she submitted improper paperwork in order to obtain a favorable mortgage on a second home. She has not been charged with a crime. 

An attorney for Cook, Abbe David Lowell, argued Friday that the allegations against Cook – that she engaged in mortgage fraud – did not qualify as “just cause” for removal. 

Trump has argued that under the Federal Reserve Act, he has the authority to dismiss a governor for “just cause,” which is typically defined as gross misconduct, but Lowell argued Trump was simply seeking to install a governor more aligned with his policy views. 

“Cause for the president means she won’t go along with the interest-rate drop,” Lowell said during Friday’s hearing. 

For months Trump has pressured the Fed to lower interest rates. Cook, the first Black woman appointed to the board, has consistently voted with Federal Reserve Chair Jerome H. Powell to not lower rates. 

Justice Department attorney Yaakov Roth, who is representing the administration, argued the statute defined just cause with open-ended language that gave the president broad discretion to fire a Fed member.

Bill Pulte, the director of the Federal Housing Finance Agency, made the accusations of mortgage fraud. He referred Cook’s mortgage application to the Department of Justice for criminal prosecution.  

In court filings, the Fed did not take a position but pushed for a quick ruling in order “to remove the existing cloud of uncertainty.”