Trump gets SC setback, top court refuses to greenlight Federal Reserve governor Lisa Cook's sacking

The Trump administration has been trying to remove Cook from the central bank immediately, but it has faced legal hurdles in doing so.

In a brief, unsigned order reported by the Associated Press, the US apex court deferred the hearing until January, when it would hear arguments over Republican President Donald Trump’s effort to force Cook off the Fed board. The court will then rule whether it needs to block a lower court ruling that was given in favour of Lisa Cook to keep her in her position.

The order was a rare instance of Trump not quickly getting everything he wants from the justices in an emergency appeal.

Trump had sought to oust Cook before the September meeting of the Fed’s interest rate-setting committee. But a judge ruled that the firing was illegal, and a divided appeals court rejected the Trump administration’s emergency appeal.

A day after the meeting concluded with a one-quarter of a percentage point reduction in a key interest rate, the administration filed a new emergency appeal with the Supreme Court.

Trump’s bid to remove Lisa Cook is on for long

The White House campaign to unseat Lisa Cook from the Federal Reserve board marks an unprecedented bid to reshape the organisation, which was designed to be largely independent from day-to-day politics. No president has fired a sitting Fed governor in the Fed’s 112-year history.

Cook, who was appointed to the Fed board by Democratic President Joe Biden, has said she will not leave her job and won’t be “bullied” by Trump. One of her lawyers, Abbe Lowell, has said she “will continue to carry out her sworn duties as a Senate-confirmed Board Governor.”

Trump has accused Cook of mortgage fraud because she appeared to claim two properties, in Michigan and Georgia, as “primary residences” in June and July 2021, before she joined the Fed board.

Such claims can lead to a lower mortgage rate and smaller down payment than if one of them were declared as a rental property or second home.

“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,” Solicitor General D. John Sauer wrote in his Supreme Court filing.

Cook has denied any wrongdoing and has not been charged with a crime.

According to the AP report, Cook specified that her Atlanta condo would be a “vacation home,” according to a loan estimate she obtained in May 2021. In a form seeking a security clearance, she described it as a “2nd home.” Both documents appear to undercut the administration’s claims of fraud.