US Supreme Court lets Lisa Cook remain as Federal Reserve governor for now

The US Supreme Court has allowed Lisa Cook to remain as a Federal Reserve governor for now, declining to act on the Trump administration’s effort to immediately remove her from the central bank.

In a brief unsigned order, the high court said it would hear arguments in January over Republican President Donald Trump’s effort to force Ms Cook off the Fed board.

The court will consider whether to block a lower-court ruling in Ms Cook’s favour while her challenge to her firing by Mr Trump continues.

Separately, the justices are hearing arguments in December in a separate but related legal fight over Mr Trump’s actions to fire members of the boards that oversee other independent federal agencies.

The case concerns whether Mr Trump can fire those officials at will.

But a second issue in the case could bear directly on Ms Cook’s fate: whether federal judges have the authority to prevent the firings or instead may only order back pay for officials who were wrongly dismissed.

Mr Trump had sought to oust Ms Cook before the September meeting of the Fed’s interest rate-setting committee.

But a judge ruled that the firing was illegal, and a divided appeals court rejected the Trump administration’s emergency appeal.

A day after the meeting concluded with a one-quarter of a percentage point reduction in a key interest rate, the administration turned to the Supreme Court in a new emergency appeal.

The White House campaign to unseat Ms Cook marks an unprecedented bid to reshape the Fed board, which was designed to be largely independent from day-to-day politics.

No president has fired a sitting Fed governor in the Fed’s 112-year history.

Ms Cook, who was appointed to the Fed board by former president Joe Biden, has said she will not leave her job and won’t be “bullied” by Mr Trump.

One of her lawyers, Abbe Lowell, has said she “will continue to carry out her sworn duties as a Senate-confirmed board governor”.

Separately, Senate Republicans recently confirmed Stephen Miran, Trump’s nominee to an open spot on the Fed’s board.

Both Ms Cook and Mr Miran took part in the Fed’s recent meeting.

Mr Miran was the sole dissenting vote, preferring a larger cut.

The next opportunity for Ms Cook to cast a vote will be at the meeting of the Fed’s interest rate setting committee, scheduled for October 28-29.

Mr Trump has accused Ms Cook of mortgage fraud because she appeared to claim two properties, in Michigan and Georgia, as “primary residences” in June and July 2021, before she joined the Fed board.

Such claims can lead to a lower mortgage rate and smaller down payment than if one of them was declared as a rental property or second home.

“Put simply, the president may reasonably determine that interest rates paid by the American people should not be set by a governor who appears to have lied about facts material to the interest rates she secured for herself — and refuses to explain the apparent misrepresentations,” solicitor general D John Sauer wrote in his Supreme Court filing.

Ms Cook has denied any wrongdoing and has not been charged with a crime.

According to documents obtained by The Associated Press, Ms Cook specified that her Atlanta condo would be a “vacation home”, according to a loan estimate she obtained in May 2021.

In a form seeking a security clearance, she described it as a “second home”.

Both documents appear to undercut the administration’s claims of fraud.

US district judge Jia Cobb ruled that the administration had not satisfied a legal requirement that Fed governors can only be fired “for cause”, which she said was limited to misconduct while in office.

Ms Cook joined the Fed’s board in 2022.

Judge Cobb also held that Mr Trump’s firing would have deprived Ms Cook of her due process, or legal right, to contest the firing.

By a 2-1 vote, a panel of the federal appeals court in Washington rejected the administration’s request to let Ms Cook’s firing proceed.

Mr Trump’s lawyers have argued that even if the conduct occurred before her time as governor, her alleged action “indisputably calls into question Ms Cook’s trustworthiness and whether she can be a responsible steward of the interest rates and economy”.