Lisa Cook: Federal Reserve Governor urges US Supreme Court to reject Donald Trump’s bid to fire her

Federal Reserve Governor Lisa Cook has urged the US Supreme Court to reject Donald Trump’s attempt to fire her, telling the justices the Republican President’s unprecedented move would destroy the central bank’s independence and disrupt financial markets.

Lawyers for Ms Cook filed a written response opposing the Justice Department’s September 18 emergency request to lift a federal judge’s order that blocked Mr Trump from immediately removing Ms Cook, an appointee of Democratic former President Joe Biden, while her legal challenge continues.

Granting Mr Trump’s request, her lawyers told the Supreme Court, “would eviscerate the Federal Reserve’s longstanding independence, upend financial markets and create a blueprint for future presidents to direct monetary policy based on their political agendas and election calendars.”

Washington-based US District Judge Jia Cobb ruled on September 9 that Mr Trump’s claims that Ms Cook committed mortgage fraud before taking office - allegations that Ms Cook denies - likely were not sufficient grounds for removal under the 1913 law that created the Fed.

The US Court of Appeals for the District of Columbia Circuit in a 2-1 ruling on September 15 denied the Administration’s request to put Ms Cobb’s order on hold, ruling that Ms Cook likely was denied due process in violation of the US Constitution’s Fifth Amendment.

In Thursday’s filing, Ms Cook’s lawyers said the Supreme Court is likely to agree that Mr Trump has not met the legal standard for removing Ms Cook with “manufactured charges based on conduct that predates her service on the board.”

Ms Cook, the first Black woman to serve as a Fed governor, sued Mr Trump in August after the President announced he would remove her.

Ms Cook has said the claims made by Mr Trump against her did not give the President the legal authority to remove her and were a pretext to fire her for her monetary policy stance.

Ms Cook’s filing echoed the warnings made in a filing to the Supreme Court earlier on Thursday by a group of 18 former US Federal Reserve officials, Treasury secretaries and other top economic officials who served under presidents from both parties.

The group included the past three Fed chairs - Janet Yellen, Ben Bernanke and Alan Greenspan - as well as former Treasury secretaries Henry Paulson, Lawrence Summers, Jacob Lew, Timothy Geithner and Robert Rubin.

They argued in a brief that letting the President remove Ms Cook while her legal challenge to Mr Trump’s action is ongoing would threaten the Fed’s independence and erode public confidence in it.

In its filing to the court last week, the Justice Department wrote: “This application involves yet another case of improper judicial interference with the President’s removal authority - here, interference with the President’s authority to remove members of the Federal Reserve Board of Governors for cause.”

Congress included provisions in the law that created the Fed to shield the central bank from political interference. Under that law, Fed governors may be removed by a president only “for cause,” though the law does not define the term nor establish procedures for removal.

No president has ever removed a Fed governor, and the law has never been tested in court.

The Cook legal battle has ramifications for the Fed’s ability to set interest rates without regard to the wishes of politicians, widely seen as critical to any central bank’s ability to function independently to carry out tasks such as keeping inflation under control.