Trump Can't Fire Lisa Cook, Supreme Court Rules

2 hours ago 4

Topline

The Supreme Court ruled Monday that President Donald Trump cannot fire Federal Reserve Governor Lisa Cook over alleged issues with her personal mortgage, dealing a major blow to the president and further shielding the Fed from political interference.

Lisa Cook is sworn in during a Senate Banking nominations hearing on June 21, 2023 in Washington, DC.

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Key Facts

The court ruled 5-4 in favor of Cook after she challenged her firing, ruling Trump’s argument in favor of firing her would “transform the Federal Reserve’s for-cause protection into at-will employment” and upend “our Nation’s tradition of central banking protected from political interference.”

Trump tried to fire Cook in August, based on alleged issues with her personal mortgage that she denies, but courts allowed Cook to stay in her role while litigation over her firing played out.

The Federal Reserve Act only allows presidents to fire members of the Fed’s board “for cause”—typically referring to some kind of gross misconduct on the job—which Cook’s attorneys argue was not the case, and her firing was unjustified.

The court ruled that while Trump is allowed to remove Cook “for cause,” that “does not mean that he may make that decision for any reason, or no reason,” and the president did not offer Cook proper “procedural protections” that would have allowed her to defend herself and challenge her firing.

It did not rule on whether or not Trump’s mortgage allegations about Cook were true or not, but only on him using them as a basis to fire her.

Why Did Trump Fire Lisa Cook?

Trump fired Cook because the government alleges she made misstatements on mortgage documents before she joined the Fed, listing her properties in Michigan and Atlanta as both being her “primary” residence. Trump has claimed that constitutes fraud and makes her unfit to serve on the Fed’s board, as it may have allowed her to obtain lower interest rates. Cook has denied any impropriety and described Trump’s allegations as “unsubstantiated” in court filings. Mortgage documents released as part of her litigation show Cook properly described her Atlanta property as a vacation home in other documents for her mortgage application, which her attorney Abbe Lowell argued makes it “impossible to conclude” she intended to commit fraud. Any suggestion in other documents that the property was a primary residence was “at most an inadvertent notation,” Lowell wrote in a letter to the Justice Department. Her firing would not be justified even if there were issues with her mortgage, her attorneys have argued, because she was not given proper due process to challenge her termination, and her personal mortgage application does not constitute professional misconduct.

Key Background

Trump’s firing of Cook came as the president has long railed against the Fed in his second term in office, blasting former Fed chief Jerome Powell for not lowering interest rates as Trump wanted. Though the Fed did end up lowering interest rates under Powell, it was not as much as Trump had pushed for, and Trump repeatedly threatened to fire Powell before the former chair’s term expired in May. The Trump administration did launch a criminal investigation into Powell, however, which was allegedly into comments he made to Congress regarding the renovation of the Fed’s headquarters. Powell alleged the investigation was politically motivated because of his unwillingness to lower rates as Trump had wanted, saying in a statement revealing the probe that it was “a consequence of the Federal Reserve setting interest rather than following the preferences of the President.” The Trump administration ultimately dropped the investigation into Powell in April, as it threatened to derail current Fed chief Kevin Warsh’s Senate confirmation, though U.S. Attorney Jeanine Pirro has not ruled out that it could be reopened in the future.