Lisa Cook, governor of the US Federal Reserve, during the Thomas Laubach Research Conference hosted by the US Federal Reserve Board of Governors in Washington, DC, US, on Friday, May 19, 2023.
Al Drago | Bloomberg | Getty Images
A federal appeals court ruled Monday that President Donald Trump cannot fire Federal Reserve Governor Lisa Cook before the central bank’s policy committee votes on whether to lower interest rates.
The ruling from the U.S. Court of Appeals for the District of Columbia Circuit means that Cook, a member of the Fed’s board of governors, can participate in the pivotal two-day meeting starting Tuesday morning.
Trump’s attorneys on Thursday had submitted an emergency request to pause a lower-court ruling, which barred Cook’s firing from taking effect while her lawsuit against the president’s action continues.
But they have “not satisfied the stringent requirements for a stay pending appeal,” the appellate court ruled in its brief order Monday night.
The White House did not immediately respond to CNBC’s request for comment.
Trump moved to fire Cook in late August “for cause,” citing allegations of mortgage fraud put forward by his administration’s housing finance director, Bill Pulte.
The move was unprecedented, though Trump, who wants interest rates slashed, has repeatedly shown little regard for concerns about the central bank’s independence.
He has frequently attacked Fed Chairman Jerome Powell for refusing to lower rates, and at points considered trying to fire him, though the Supreme Court appeared to offer some cover for Powell in a May ruling.
Trump has backed off the threats against Powell, but he has followed through on moving to fire Cook, an appointee of former President Joe Biden who has voted in lockstep with Powell.
Cook sued to block her firing. She has denied committing mortgage fraud.
The panel of three judges handling the appeal includes J. Michelle Childs and Bradley Garcia, two appointees of former President Joe Biden, who sided against Trump’s bid for a quick stay.
U.S. District Judge Jia Cobb, who blocked Cook’s firing last week, was “correct” when she ruled that Trump’s action likely violated the Constitution’s Due Process Clause, Garcia wrote in a concurring statement.
“For that reason — and because of the myriad unique features of this case as compared to other recent challenges to presidential removals — I vote to deny the government’s emergency request for a stay pending appeal,” Garcia wrote in his concurrence, which was joined by Childs.
The third judge, Trump appointee Gregory Katsas, said in a dissenting statement that would have granted the president’s request.
Katsas said he disagreed with Cobb’s findings that Cook cannot be removed for conduct that predated her appointment to the Fed, and that she has a constitutionally protected property interest in her office.
“In my view, both holdings are mistaken, and the equitable balance here tips in favor of the government,” Katsas wrote. “So, I would grant the government’s motion for a stay pending appeal.”
