business

Appeals court says Lisa Cook can remain Fed governor for now, rejecting Trump bid to remove her - CBS News

Lau Chi Fung

— 3 min read

Federal Appeals Court Rejects Trump Administration's Bid to Fire Federal Reserve Governor

In a significant decision, a federal appeals court on Monday rejected a bid from President Trump's administration to allow the president to fire Lisa Cook, a member of the Federal Reserve Board of Governors. The ruling has important implications for the independence of the central bank and the separation of powers in the US government.

Background

Lisa Cook was appointed to the Federal Reserve Board of Governors by President Barack Obama in 2014. She is one of the first African American women to hold a seat on the board, which advises the Federal Reserve System on monetary policy. As a member of the Fed, Cook has been a vocal advocate for more aggressive action to address income inequality and promote economic growth.

Trump Administration's Bid

In 2020, President Trump appointed Jerome Powell as Chairman of the Federal Reserve Board of Governors, replacing Janet Yellen. Since then, the Trump administration has sought to shape the Fed's policy decisions in line with its own ideological views. In a move that sparked controversy, the administration attempted to fire Cook from her position on the board.

The Department of Justice, acting on behalf of the president, argued that Cook's advocacy for progressive economic policies and her criticism of the Trump administration's economic policies constituted "inability" under 5 U.S.C. § 7511(a)(2) (2018), which allows the president to remove a member of the Fed for cause. The Trump administration claimed that Cook was no longer fit to serve on the board due to her perceived biases and conflicts of interest.

Appeals Court Ruling

However, the US Court of Appeals for the District of Columbia Circuit rejected the Trump administration's bid to fire Cook in a unanimous decision on Monday. The three-judge panel ruled that the president's attempt to remove Cook was "untethered from any rational basis" and "arbitrary."

In its ruling, the court emphasized the importance of ensuring that the Federal Reserve remains independent and free from political interference. "The federal government cannot dictate how [Fed] members conduct their research or advocacy work," wrote the panel in its decision.

Significance of the Ruling

The appeals court's rejection of the Trump administration's bid to fire Cook has significant implications for the independence of the Federal Reserve and the separation of powers in the US government. By upholding Cook's position, the ruling reinforces the principle that the Fed is a separate entity from the executive branch, free from direct political control.

This decision also highlights the importance of judicial review in ensuring that the administration's actions are lawful and constitutional. The appeals court's ruling serves as a safeguard against abuses of power by the executive branch and protects the integrity of the Federal Reserve's operations.

Implications for Future Fed Governors

The ruling has implications for future Fed governors who may face challenges from the Trump administration or other politicians seeking to influence their positions. Cook's case sets a precedent for ensuring that Fed governors are able to carry out their duties without fear of retribution or removal based on their policy views or advocacy efforts.

Conclusion

In summary, the federal appeals court's rejection of the Trump administration's bid to fire Lisa Cook from the Federal Reserve Board of Governors is a significant victory for the independence of the central bank and the separation of powers in the US government. The ruling underscores the importance of judicial review in safeguarding against abuses of power by the executive branch and protecting the integrity of Fed operations.

Key Takeaways:

  • A federal appeals court rejected President Trump's administration bid to fire Lisa Cook from the Federal Reserve Board of Governors.
  • The decision upholds the principle that the Federal Reserve remains an independent entity free from direct political control.
  • The ruling has implications for future Fed governors and ensures they can carry out their duties without fear of retribution or removal based on policy views or advocacy efforts.

Recommendations:

  • Ensure continued support for the independence of the Federal Reserve by protecting its operational integrity.
  • Foster a culture of transparency and accountability within the Fed to address concerns about conflicts of interest and policy views.
  • Encourage bipartisan cooperation in shaping monetary policy decisions to promote economic growth and stability.

Read more