WASHINGTON — President Trump appealed to the Supreme Court on Thursday seeking to fire Federal Reserve Governor Lisa Cook from the independent board that can raise or lower interest rates.
This appeal “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,” Solicitor Gen. D. John Sauer wrote.
The appeal is the second this month asking the court to give Trump broad new power over the economy.
The first, to be heard in November, will decide if the president to free to impose large import taxes on products coming into this country.
The new case could determine if he is free to remake the Federal Reserve Board by removing a Democratic appointee who he says may have broken the law.
Trump’s lawyers argue that a Fed governor has no legal right to challenge the president’s decision to fire her.
“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,” Trump’s lawyer said.
This week, Stephen Miran, one of Trump’s top economic advisors, was confirmed to serve a temporary term on the seven-member Federal Reserve Board. He joined two other Trump appointees. If Cook is ousted, Trump could soon have a majority.
The president has chafed at the Federal Reserve board for keeping interest rates high to fight inflation, and he threatened to fire board Chairman Jerome Powell, even though Trump appointed him to that post in 2018.
But last month, Trump turned his attention to Cook and said he had cause to fire her.
Congress wrote the Federal Reserve Act of 1913 intending to give the central bank board some independence from politics and the current president.
Its seven members are appointed by the president and confirmed by the Senate, and they serve staggered terms of 14 years, unless “removed for cause by the president.”
The law does not define what amounts to cause.
President Biden appointed Cook to a temporary term in 2022 and to a full term a year later.
In August, however, Bill Pulte, Trump’s director of the Federal Housing Finance Agency, alleged Cook committed mortgage fraud when she took out two housing loans in 2021. One was for $203,000 for a house in Ann Arbor, Mich., and the second was for $540,000 for a condo in Atlanta. In both instances, he said she signed a loan document saying the property would be her primary residence.
Typically, borrowers obtain a better interest rate for a primary residence. But lawyers say charges of mortgage fraud are extremely rare if the borrower makes the required regular payments on the loan.
About 30 minutes after Pulte posted his allegations, Trump posted on his social media site: “Cook must resign. Now!!!”
Cook has not responded directly to the allegations, but her attorneys pointed to news reports that said she told the lender her Atlanta condo would be a vacation home.
Trump, however, sent Cook a letter on Aug. 25. “You may be removed, at my discretion, for cause,” citing the law and Pulte’s referral. “I have determined that there is sufficient cause to remove you from your position,” he wrote.
Cook filed a suit to challenge the decision. She argued the allegation did not amount to cause under the law, and she had not been given a hearing to contest the charges.
U.S. District Judge Jia Cobb, a Biden appointee, agreed she made a “strong showing” the firing was illegal and blocked her removal.
She said Congress wrote the “for cause” provision to punish “malfeasance in office,” not conduct that pre-dated her appointment. She also said Cook had been denied “due process of law” because she was not given a hearing.
The U.S. appeals court in Washington, by a 2-1 vote, refused to lift her order Monday.
Judges Bradley Garcia and J. Michelle Childs, both Biden appointees, said Cook had been denied “even minimal process — that is, notice of the allegation against her and a meaningful opportunity to respond — before she was purportedly removed.”
Judge Gregory Katsas, a Trump appointee, dissented. He said the “for cause” removal provision was broader than misconduct in office. It means the president may remove an officer for “some cause relating to” their “ability, fitness, or competence” to hold the office, he said.
And because a government position is not the property of office holders, they do not have a “due process” right to contest their firing, he said.
