The judge prevents Trump from dismissing the governor of the Fed, Lisa Cook, the allegations of mortgage fraud
On Tuesday, a federal judge prevented President Donald Trump from withdrawing Lisa Cook from the Council of Governors of the Federal Reserve, judging that his attempt to eliminate him the allegations of unsecured mortgage has probably violated the federal law and its constitutional rights.
US District Judge Jia COBB in Washington granted Cook’s request for an injunction which allows him to remain on the board of directors of seven Fed members while his trial is advancing. The decision comes less than a week before the next political meeting of the central bank from September 16 to 17, ensuring that Cook can participate in deliberations on interest rates.
Cook, appointed by President Biden to a 14 -year term which takes place until 2038, was dismissed by Trump in August after the chief of the Federal Housing Finance Agency published allegations according to which she had badly won several residences on mortgage documents in 2021, before joining the Fed. Trump announced his withdrawal in a letter published on social networks, quoting “a deceptive and potentially criminal conduct”.
The dismissal marked the first attempt at the “cause” abolition of a Fed governor in the 111 years in the history of the Central Bank. Presidents have rarely tried to withdraw officials from the government protected by clauses “for good reason”. Judge COBB noted in his opinion the dismissal of President TAFT in 1913 of two members of the board of directors following an in -depth investigation and mentions that President Ford planned to abolish a member of the board of directors of civil aeronautics in the 1970s.
However, the legal landscape has changed considerably in recent years. The Supreme Court has reduced referral protections for certain agency leaders, noting that certain arrangements bring the presidential authority to the executive power unconstitutionally. But the court suggested that the federal reserve could justify a different treatment given its structure and its unique role in monetary policy.
In a recent ordinance, the Supreme Court aroused a decision of a lower court which would have temporarily prohibited the president from withdrawing Rebecca Slaughter, commissioner of the Federal Commerce Commission. The administrative stay represents the strongest indication to date that the judges can be ready to overthrow the previous 1935 Executor of Humphrey c. UNITED STATESin which the court confirmed the protections “for good reason” for certain representatives of the government.
Unlike these cases, where the administration offered no legal justification or the provision of the reasons for cause was challenged by third parties instead of a president who tries to withdraw an official, the Trump administration said that it had a sufficient cause to withdraw Cook, raising the question of what matters as a cause of withdrawal directly before the court. The Federal Reserve Act first set up the protection “for the cause” in 1913. It was briefly removed in 1933 then restored in 1935, shortly after Humphrey’s executor was decided. Unlike many provisions of this type in the American code, however, the Federal Reserve Act does not define what counts as a cause or the explicit limit to the actions taken in office.
COBB judge ruled that Trump’s justification was legally insufficient under the law of the Federal Reserve, which authorizes the dismissal of a governor that “for good”. She concluded that the Congress wanted the expression to cover a fault or the inability to exercise tasks during her mandate, and not an alleged behavior before the appointment. “The withdrawal was not supposed to be based on the president’s assumptions on the future performance of the official as extrapolated an unproven conduct dating before they take the office,” Cobb wrote.
The judge also judged Cook likely to prevail on his request that the dismissal violated his maturity rights of the fifth amendment, because she has received no notice or hearing. Announcing its withdrawal via social media, said COBB, failed to satisfy the basic constitutional protections.
By issuing the order, the court processed the request for cook for a temporary prohibition order as a preliminary application request – a stronger form of rescue after a contradictory briefing. This decision offers COOK greater security while the case takes place, but also makes the decision immediately called. The Ministry of Justice is expected to apply for the DC Court of Appeals circuit, and the case could quickly reach the Supreme Court.
The White House said Trump “legally withdrawn Lisa Cook due to credible mortgage fraud allegations.” Cook’s lawyer, Abbe Lowell, at the end that the decision “recognizes and reaffirms the importance of safeguarding the independence of the federal reserve against illegal political interference”.
The dispute establishes an unprecedented test of presidential power on the central bank. Recent decisions of the Supreme Court have reduced employment protections in other independent agencies, but the Fed has historically experienced greater isolation of political influence. Earlier this year, the court suggested in a separate case that the governors of the federal reserve could have stronger permanence protections than those responsible for other regulators.
The fight occurs while Trump presss the Fed to reduce interest rates and is preparing to appoint Stephen Miran to a vacant board seat. The president of the Fed, Jerome Powell and the rest of the board of directors, were appointed defendant in the Cook trial, but did not take a stand, saying that they will respect the courts. A spokesperson for the Fed refused to comment on Tuesday.
Cook’s trial alleges that the allegations of mortgage fraud was a pretext for Trump in order to sit for his own named. The Ministry of Justice has opened an investigation into complaints, which its lawyers consider as foundation or the product of office errors.
COBB has ruled that the public interest promotes the maintenance of cooking in place. “The public interest in the independence of the federal reserve weighs in favor of the reintegration of cook,” she wrote.
