When Donald Trump fired Lisa Cook, I stated that it was a bit premature to make such a move.
There is definitely a case to be made to remove her from her role at the Federal Reserve, but it would have to come after she was found guilty of mortgage fraud allegations leveled against her.
Cook appealed to the U.S. Supreme Court to protect her job, and for now, the justices will allow her to hold her seat.
By law, a member of the board of the Federal Reserve cannot be fired without cause.
Trump believes that he had that cause, given the mortgage fraud allegations made against Cook, but she has not been found guilty of anything, at least not yet, which is why I thought the president jumped the gun here.
The administration's motive was clear in that Trump wanted his people in place at the Fed because he wanted interest rates lowered, but Cook was not cooperating.
She responded to the news of her dismissal, stating, “I will not resign. I will continue to carry out my duties to help the American economy as I have been doing since 2022.”
Cook appealed her case to the Supreme Court, saying that if Trump were permitted to remove her, the board would be subservient to the president rather than independent, and he would put loyalists in place who would grant his every wish.
Her lawyers argued, “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."
They continued, “And granting the President’s request for immediate relief to alter the status quo would sound the death knell for the central-bank independence that has helped make the United States’ economy the strongest in the world.”
While this fight continued, the Fed did make an interest rate reduction, but only by 25 points, far less than Trump wanted, so this case was suddenly back in the spotlight.
With regard to other questionable federal firings, the Supreme Court has sided with Trump, so most of us thought that would be the case again here, but it was not, leaving Democrats with a shocking victory that likely had their jaws hitting the floor.
The Supreme Court has set oral arguments in the dispute for January, which likely means a decision in spring or early summer. However, the Court has ruled that for now, Cook may retain her job.
Solicitor General D. John Sauer argued, "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.” His argument, however, fell on deaf ears.
Now, this preliminary outcome is not a definitive sign of any future ruling, but it is telling, considering how previous rulings in this realm have gone. I would expect the DOJ to go into overdrive on its case against Cook, likely pushing for an indictment as soon as possible to give the administration more ammunition in this case ahead of oral arguments. Everything may now hinge on the DOJ’s ability to secure that indictment and a conviction.
