(Yahoo! Finance) - The Supreme Court is letting Lisa Cook remain as a Federal Reserve governor before hearing arguments in January about whether President Trump has the authority to remove her from her post.
The decision is a setback for Trump, who has been pushing for Cook's immediate firing and trying to put his own stamp on the nation's central bank.
His Justice Department on Sept. 18 filed an emergency request to lift a federal judge's order that blocked Trump from removing Cook for mortgage fraud allegations.
Cook has urged the Supreme Court last Thursday to reject Trump’s effort to fire her, arguing it would harm central bank independence and disrupt financial markets. Cook was appointed by former President Joe Biden.
“Granting the President’s request for immediate relief to alter the status quo would sound the death knell for the central-bank independence that has helped make the United States’ economy the strongest in the world,” Cook’s lawyers argued in a filing last week.
There needs to be some “meaningful check” on the president’s ability to remove Cook, they added, noting that otherwise “any president could remove any governor based on any charge of wrongdoing, however flawed.”
On Wednesday Cook's lawyers said in a new statement that the Supreme Court's latest ruling "allows governor Cook to continue in her role on the Federal Reserve Board, and we look forward to further proceedings consistent with the Court’s order."
A White House spokesperson on Wednesday said that “President Trump lawfully removed Lisa Cook for cause from the Federal Reserve Board of Governors. We look forward to ultimate victory after presenting our oral arguments before the Supreme Court in January.”
The fight in the nation's highest court comes after US District Judge Jia Cobb on Sept. 9 blocked Trump from firing Cook, saying that the alleged mortgage fraud allegations do not meet the Federal Reserve Act's "for cause" clause needed to remove a central bank official.
The White House appealed that ruling to the US Court of Appeals for the District of Columbia Circuit. But in a 2-1 ruling on Sept. 15 that request was also rejected.
Cook participated in the Fed’s policy meeting last week, voting to lower rates by 25 basis points. There are two more meetings this year, in late October and early December.
Since the Fed was established in 1913, a president has never actually fired a Fed member.
Section 10 of the Federal Reserve Act states that each member of the board shall hold office for 14 years unless sooner removed for cause by the president. The statute does not detail what exactly constitutes "for cause." That term has been interpreted in legal rulings to mean inefficiency, neglect of duty, or malfeasance.
The Supreme Court suggested in a decision in late May that Federal Reserve board members, including Fed Chair Jerome Powell, were insulated from being fired by the president at will.
By Jennifer Schonberger - Senior Reporter
