Story by Guardian staff and agencies
A US appeals court declined to allow Donald Trump to fire Lisa Cook, a Federal Reserve governor, in the latest step in a legal battle that threatens the Fed’s longstanding independence.
The decision by the US court of appeals for the District of Columbia circuit means that Cook can for now remain at the Fed ahead of its policy meeting on Tuesday and Wednesday where it is expected to cut US interest rates to shore up a cooling labor market.
The judge denied the justice department’s request to put on hold a judge’s order temporarily blocking the Republican president from removing Cook, an appointee of Democratic former president Joe Biden. It was the first time a president has pursued such action since the central bank’s founding in 1913. The administration is expected to appeal the ruling to the US supreme court.
The ruling comes just as the US Senate narrowly confirmed Stephen Miran, already chair of Trump’s council of economic advisers as a Fed governor.
The appeals court decision was 2-1, with judges Bradley Garcia and J Michelle Childs in the majority, both of whom were appointed by Biden. Gregory Katsas, a Trump appointee, dissented.
US district judge Jia Cobb had ruled on 9 September that Trump’s claims that Cook committed mortgage fraud before taking office, which Cook denies, likely were not sufficient grounds for removal under the law that created the Fed.
In setting up the Fed, Congress included provisions to shield the central bank from political interference. Under the law that created the Fed, its governors may be removed by a president only “for cause”, though the law does not define the term nor establish procedures for removal. No president has ever removed a Fed governor and the law has never been tested in court.
Cook, the first Black woman to serve as a Fed governor, sued Trump and the Fed in late August. Cook has said the claims did not give Trump the legal authority to remove her and were a pretext to fire her for her monetary policy stance.
The property tax authority in Ann Arbor, Michigan, told Reuters that Cook hasn’t broken rules for tax breaks on a home she declared her primary residence.
The finding could bolster Cook’s defense against any further efforts from the Trump administration to remove her from her post. Ann Arbor has “no reason to believe” that Cook violated property tax rules, Jerry Markey, a city assessor, told Reuters. Cook has at times lived elsewhere and city records indicate she sought permission from Ann Arbor authorities to rent out the Michigan home on a short-term basis.
Temporary absence from the home or renting it out short-term wouldn’t disqualify her from a tax exemption in Ann Arbor, the tax official said. “Living elsewhere temporarily does not necessarily make an owner ineligible for a principal residence exemption,” said Markey.
