federal reserve board

WASHINGTON — The Supreme Court on Wednesday put off a decision on whether President Trump can fire Federal Reserve Governor Lisa Cook and said it would hear arguments on the case in January.

The court’s action allows Cook to remain in her position, and it prevents Trump from taking majority control of the historically independent central bank board.

Last month, the president said he fired Cook “for cause,” citing mortgage documents she signed in 2021 confirming that two different properties were her primary residence.

But the flap over her mortgages arose as Trump complained that the Federal Reserve Board, including Cook, had not lowered interest rates to his satisfaction.

“We will have a majority very shortly,” Trump said after he fired Cook.

In September, Trump appointed Stephen Miran, the chair of of his White House Council of Economic Advisers, to serve a temporary term on the seven-member Federal Reserve Board. He joined two other Trump appointees.

Congress wrote the Federal Reserve Act of 1913 intending to give the central bank board some independence from politics and the current president.

Its seven members are appointed by the president and confirmed by the Senate, and they serve staggered terms of 14 years, unless “removed for cause by the president.”

The law does not define what amounts to cause.

President Biden appointed Cook to a temporary term in 2022 and to a full term a year later.

In August, Bill Pulte, Trump’s director of the Federal Housing Finance Agency, alleged that Cook committed mortgage fraud when she took out two housing loans in 2021. One was for $203,000 for a house in Ann Arbor, Mich., and the second was for $540,000 for a condo in Atlanta. In both instances, he said she signed a loan document saying the property would be her primary residence.

Mortgage lenders usually offer a lower interest rate for a borrower’s primary residence.

Cook has not directly refuted the allegation about her mortgage documents, but her attorneys said she told the lender she was seeking the Atlanta condo as a vacation home.

Trump, however, sent Cook a letter on Aug. 25 that said, “You may be removed, at my discretion, for cause,” citing the law and Pulte’s referral. “I have determined that there is sufficient cause to remove you from your position,” he wrote.

Cook refused to step down and filed a suit to challenge the decision. She argued the allegation did not amount to cause under the law, and she had not been given a hearing to contest it.

A federal judge in Washington agreed and blocked her firing, noting that unproven allegation of mortgage fraud occurred before she was appointed to the Federal Reserve.

In a 2-1 vote, the appeals court also refused to uphold her firing.

Trump’s lawyers sent an emergency appeal to the Supreme Court on Sept. 18 arguing Congress gave the president the authority to fire a Fed governor he concludes she is not trustworthy.

“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,” wrote Trump Solicitor Gen. D. John Sauer.

But the justices refused to act on an emergency appeal and decided they will give the case a full hearing and a written decision.

WASHINGTON — The Supreme Court said Monday it will decide on reversing a 90-year precedent that has protected independent agencies from direct control by the president.

The court’s conservative majority has already upheld President Trump’s firing of Democratic appointees at the National Labor Relations Board and Merit Systems Protection Board. And in a separate order on Monday, it upheld Trump’s removal of a Democratic appointee at the Federal Trade Commission.

Those orders signal the court is likely to rule for the president and that he has the full authority to fire officials at independent agencies, if Congress said they had fixed terms.

The only hint of doubt has focused on the Federal Reserve Board. In May, when the court upheld the firing of an NLRB official, it said it decision does not threaten the independence of Federal Reserve.

The court described it as “a uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States.” Trump did not share that view. He threatened to fire Federal Reserve Chair Jerome Powell during the summer because he had not lowered interest rates.

And he is now seeking to fire Federal Reserve Governor Lisa Cook, a Biden appointee, based on the allegation she may have committed mortgage fraud when she took out two home loans in 2021.

Trump’s lawyers sent an emergency appeal to the Supreme Court last week seeking to have Cook removed now.

Long before Trump’s presidency, Chief Justice John G. Roberts had argued that the president has the constitutional power to control federal agencies and to hire or fire all officials who exercise significant executive authority.

But that view stands in conflict with what the court has said for more than a century. Since 1887, when Congress created the Interstate Commerce Commission to regulate railroad rates, lawmakers on Capitol Hill believed they had the authority to create independent boards and commissions.

Typically, the president would be authorized appoint officials who would serve a fixed term set by law. At times, Congress also required the boards have a mix of both Republican and Democratic appointees.

The Supreme Court unanimously upheld that understanding in a 1935 case called Humphrey’s Executor. The justices said then these officials made judicial-type decisions, and they should be shielded from direct control by the president.

That decision was a defeat for President Franklin Roosevelt who tried to fire a Republican appointee on the Federal Trade Commission.

In recent years, the chief justice and his conservative colleagues have questioned the idea that Congress can shield officials from direct control by the president.

In Monday’s order, the court said it will hear arguments in December on “whether the statutory removal protections for members of the Federal Trade Commission violate the separation of powers and, if so, whether Humphrey’s Executor v. United States, 295 U. S. 602 (1935), should be overruled.”

Justice Elena Kagan has repeatedly dissented in these cases and argued that Congress has the power to make the law and structure the government, not the president.

Joined by Justices Sonia Sotomayor and Ketanji Brown Jackson, she objected on Monday that the court has continued to fire independent officials at Trump’s request.

“Our emergency docket should never be used, as it has been this year, to permit what our own precedent bars,” she wrote. “Still more, it should not be used, as it also has been, to transfer government authority from Congress to the President, and thus to reshape the Nation’s separation of powers.”

WASHINGTON — President Trump appealed to the Supreme Court on Thursday seeking to fire Federal Reserve governor Lisa Cook from the independent board that can raise or lower interest rates.

The appeal “involves yet another case of improper judicial interference with the President’s removal authority — here, interference with the President’s authority to remove members of the Federal Reserve Board of Governors for cause,” wrote Solicitor Gen. D. John Sauer.

The appeal is the second this month asking the court to give Trump broad new power over the economy.

The first, to be heard in November, will decide if the president to free to impose large import taxes on products coming into this country.

The new case could determine if he is free to remake the Federal Reserve Board by removing a Democratic appointee who he says may have broken the law.

Trump’s lawyers argue that a Fed governor has no legal right to challenge the president’s decision to fire her.

“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,” Trump’s lawyer said.

Trump has chafed at the Federal Reserve board for keeping interest rates high to fight inflation, and he threatened to fire board chairman Jay Powell, even though he appointed him to that post in 2018.

But last month, Trump turned his attention to Cook and said he had cause to fire her.

Congress wrote the Federal Reserve Act of 1913 intending to give the central bank board some independence from politics and the current president.

Its seven members are appointed by the president and confirmed by the Senate, and they serve staggered terms of 14 years, unless “removed for cause by the president.”

The law does not define what amounts to cause.

President Biden appointed Cook in 2023 and she was confirmed to a full term.

In August, however, Bill Pulte, Trump’s director of the Federal Housing Finance Agency, alleged Cook committed mortgage fraud when she took out two housing loans in 2021. One was for $203,000 for a house in Ann Arbor, Mich., and the second was for $540,000 for a condo in Atlanta. In both instances, she signed a loan document saying the property would be her primary residence.

Typically, borrowers obtain a better interest rate for a primary residence. But lawyers say charges of mortgage fraud are extremely rare if the borrower makes the required regular payments on the loan.

About 30 minutes after Pulte posted his allegations, Trump posted on his social media site: “Cook must resign. Now!!!”

Cook has not responded directly to the allegations, but her attorneys pointed to news reports which said she told the lender her Atlanta condo would be a vacation home.

Trump, however, sent Cook a letter on Aug. 25. “You may be removed, at my discretion, for cause,” citing the law and Pulte’s referrral. “I have determined that there is sufficient cause to remove you from your position,” he wrote.

Cook filed a suit to challenge the decision. She argued the allegations did not amount to cause under the law, and she had not been given a hearing to contest the charges.

U.S. District Judge Jia Cobb, a Biden appointee, agreed she made a “strong showing” the firing was illegal and blocked her removal.

She said Congress wrote the “for cause” provision to punish “malfeasance in office,” not conduct that pre-dated her appointment. She also said Cook had been denied “due process of law” because she was not given a hearing.

The U.S. appeals court in Washington, by a 2-1 vote, refused to lift her order on Monday.

Judges Bradley Garcia and J. Michelle Childs, both Biden appointees, said Cook had been denied “even minimal process — that is, notice of the allegation against her and a meaningful opportunity to respond — before she was purportedly removed.”

Judge Gregory Katsas, a Trump appointee, dissented. He said “for cause” removal provision was broader than misconduct in office. It means the president may remove an officer for “some cause relating to” their “ability, fitness, or competence” to hold the office, he said.

And because a government position is not the property of office holders, they do not have a “due process” right to contest their firing, he said.