Appeals court rules Fed governor Cook can continue to serve
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Fed governor Lisa Cook (center). Photo: David Paul Morris/Bloomberg via Getty Images
Federal Reserve governor Lisa Cook can continue to serve as President Trump's attempt to fire her is litigated, an appeals court decided in a 2-1 ruling on Monday.
Why it matters: The Fed's policy committee begins a two-day meeting Tuesday, at which it is likely to cut interest rates for the first time in nine months.
- Pending a potential emergency appeal to the Supreme Court, Cook will be at the table.
The big picture: More broadly, the ruling suggests courts will act as much of a brake on the president's ability to fire Fed officials.
- Advocates of central bank independence view the case as a key test of the principle that presidents cannot replace Fed leaders because of policy disagreements or unproven allegations.
Driving the news: Judge Bradley Garcia, of the U.S. Circuit Court of Appeals, wrote in a concurring opinion with fellow Biden-appointed Judge Michelle Childs that Cook was likely to succeed in the case.
- The D.C.-based judges addressed Trump administration accusations that Cook had committed mortgage fraud, allegations that she denies.
- "Given that Cook has a property interest in her position, she is entitled to 'some kind' of process before removal," Garcia wrote.
- "Before this court, the government does not dispute that it provided Cook no meaningful notice or opportunity to respond to the allegations against her," Garcia added.
- "The government argues only that Cook 'does not explain what difference a hearing would have made.' Even accepting that premise, Cook's entitlement to process stands apart from whether she would succeed in securing a different outcome."
Of note: Judge Gregory Katsas dissented.
- The Trump-appointed judge wrote in his dissent that the District Court judge was "mistaken" in ruling that Cook has "a constitutionally protected property interest in her office."
Catch up quick: Cook is serving a term not scheduled to expire until 2038. Trump announced her firing in late August over accusations, lodged by his housing chief, that in mortgage applications on two separate properties she claimed both were her primary residence.
- The accusation, which Federal Housing Finance Agency director Bill Pulte referred to the Justice Department for criminal prosecution, has not been litigated in any court or formal process.
- Reuters reported Friday that separate documents issued by Cook's credit union listed one of the properties, a condo in Atlanta, as a vacation residence.
Zoom out: The Federal Reserve Act states that a president can remove a Fed governor "for cause." The dispute is over how that cause must be established, and whether issues involving a private financial issue before the appointee took office qualify.
- Trump administration lawyers argue that the president has broad authority to remove officials based on his judgment that there is cause.
- Cook's lawyers have argued that if the president alone decides what constitutes cause, then there is essentially no limit on his ability to fire central bank officials, contrary to the design of the Federal Reserve Act.
- Representatives for the White House and Cook did not immediately respond to Axios' Monday evening request for comment.
Go deeper: Fed governor Cook sues Trump administration in fight over firing
Editor's note: This article has been updated with new details throughout.
