Court rules Lisa Cook can remain a Fed governor while fighting Trump’s attempt to fire her

By CHRISTOPHER RUGABER and LINDSAY WHITEHURST Associated Press WASHINGTON AP A federal court has ruled that embattled Federal Reserve Gov Lisa Cook can remain in her position while she fights President Donald Trump s efforts to fire her The ruling which will almost certainly be appealed is a blow to the Trump administration s efforts to assert more control over the traditionally independent Fed which sets short-term interest rates to achieve its congressionally mandated goals of stable prices and maximum employment Congress has also sought to insulate the Fed from day-to-day politics Related Articles Howie Carr Rep Pressley now D-MV as in Martha s Vineyard Trump having dinner at a restaurant near the White House to promote his Washington crackdown Trump tries to soothe Qatar after Israeli strikes but stops short of decrying another ally Plans in the works for Korean workers detained in raid to go home while fear lingers for residents Chicagoans change routines as immigration crackdown looms Specific carry passports and avoid stores U S District Judge Jia Cobb late Tuesday granted Cook s request for a preliminary injunction blocking her firing while the dispute makes its way through the courts Cobb ruled that Cook would likely prevail in the lawsuit she filed late last month to overturn her firing Trump a Republican announced he was firing Cook on Aug over assertions raised by one of his appointees that she committed mortgage fraud related to two properties she purchased in Ann Arbor Michigan and Atlanta in before she joined the Fed Cook is accused of saying the properties were primary residences which could have resulted in lower down payments and mortgage rates than if either was designated a second home or outlay property The White House insisted Trump had the right to fire Cook President Trump lawfully removed Lisa Cook for cause due to credible accusations of mortgage fraud from her highly sensitive position overseeing financial institutions on the Federal Reserve Board of Governors White House spokesman Kush Desai declared Wednesday in a declaration This ruling will not be the last say on the matter and the Trump Administration will continue to work to restore accountability and confidence in the Fed But Cobb ruled that the accusations likely weren t sufficient legal cause to fire Cook Under the law governing the Fed governors can only be removed for cause which Cobb stated was limited to actions taken during a governor s time in office The removal of a Federal Reserve Governor extends only to concerns about the Board member s ability to effectively and faithfully execute their statutory duties in light of events that have occurred while they are in office Cobb wrote Cobb was appointed by President Joe Biden a Democrat President Trump has not stated a legally permissible cause for Cook s removal the ruling added The decision means Cook will be able to participate in the Fed s meeting Sept - when it is expected to reduce its key short-term rate by a quarter-point to between and Federal Reserve governors aren t like cabinet secretaries and the law doesn t allow a president to fire them over plan disagreements or because he only wants to replace them Congress sought to insulate the Fed from political pressure the court noted by giving Fed governors long staggered terms that make it unlikely a president can appoint a majority of the board in a single term Allowing the President to unlawfully remove Governor Cook on unsubstantiated and vague accusations would endanger the stability of our financial system and undermine the rule of law Cook s lawyer Abbe Lowell disclosed in a written message Governor Cook will continue to carry out her sworn duties as a Senate-confirmed Board Governor The court also directed the Fed s board of governors and its chair Jerome Powell to allow Cook to continue to operate as a member of the Board for the pendency of this litigation Lowell had argued in court filings that Cook was entitled to a hearing and a chance to respond to the charges before being fired but was not provided either The court agreed that she was not provided due process by the Trump administration Her lawsuit denied the charges but did not provide more details The episode could become a turning point for the -year-old Federal Reserve No president has sought to fire a Fed governor before Economists prefer independent central banks because they can do unpopular things like lifting interest rates to combat inflation more easily than elected executives A great number of economists worry that if the Fed falls under the control of the White House it will keep its key interest rate lower than justified by economic fundamentals to satisfy Trump s demands for cheaper borrowing That could accelerate inflation and could also push up longer-term interest rates such as those on mortgages and car loans Investors may demand a higher yield to own bonds to offset greater inflation in the future lifting borrowing costs for the U S governing body and the entire financial market If Trump can replace Cook he may be able to gain a - majority on the Fed s governing board Trump appointed two board members during his first term and has nominated a key White House economic adviser Stephen Miran to replace Adriana Kugler another Fed governor who stepped down unexpectedly Aug The Senate Banking Committee is scheduled to vote Wednesday on Miran s nomination Trump has mentioned he will only appoint to the Fed people who will assistance lower rates Trump has repeatedly attacked Powell and the other members of the Fed s interest-rate setting committee for not cutting the short-term interest rate they control more speedily It currently stands at after Fed policymakers reduced it by a full percentage point late last year Trump has declared he thinks it should be as low as a level that no Fed official and meager economists aid Powell not long ago signaled that the central bank was leaning toward cutting its rate at its meeting next week Cook is the first Black woman to serve as a Fed governor She was a Marshall Scholar and received degrees from Oxford University and Spelman College and prior to joining the board she taught at Michigan State University and Harvard University s Kennedy School of Governing body AP writer Will Weissert contributed to this document