Supreme Court allows Lisa Cook to remain at Fed, for now

By ANN E. MARIMOW and COLBY SMITH

The Supreme Court on Wednesday declined to allow President Donald Trump to immediately remove Lisa Cook from the Federal Reserve Board, saying it would instead review the administration’s efforts to oust her and reshape the central bank at oral arguments in January.

Top former Fed and Treasury officials and Cook’s legal team had warned the Supreme Court that permitting Trump to fire her while litigation over her status was underway would spur economic turmoil and undermine public confidence in the Fed.

While the Supreme Court’s conservative majority has repeatedly cleared the way for the president to fire leaders of other independent agencies, the justices have recently signaled that the central bank is uniquely independent.

In its two-sentence, unsigned order Wednesday, the court deferred ruling on Cook’s status until after it heard arguments in the matter in January. The decision to take up the case means the justices will confront at least three testing Trump’s policies in their new term, which begins Monday. The court is already set to review some of the president’s most sweeping tariffs and his ouster of a leader of the Federal Trade Commission.

The legal battle over Cook’s firing has major implications for the central bank and its ability to set interest rates free from political interference. Every living former Fed chair — Alan Greenspan, Ben Bernanke and Janet Yellen — joined former Treasury secretaries nominated by presidents of both parties to tell the justices in a court filing that Cook should be allowed to stay on the job while her case was being reviewed to ensure “stability of the system that governs monetary policy in this country.”

In the months since he returned to the White House, Trump has put public pressure on the Fed far exceeding that of his predecessors, with repeated demands that it lower borrowing costs. The president has also taken steps to add a political loyalist to the central bank’s board of governors.

Justice Department lawyers have defended the president’s actions, saying in court filings that he ousted Cook “for cause” for alleged mortgage fraud. The 1913 law that created the central bank sets a fixed tenure for Fed governors to serve “unless sooner removed for cause by the president.”

White House press secretary Karoline Leavitt said Wednesday that “we maintain that she was fired well within the president’s legal authority to do so” and “look forward to that case being fully played out at the Supreme Court.”

The court’s decision to allow Cook to stay on as a governor was welcomed by former officials, economists and investors, who have been very concerned about the president’s efforts to erode the central bank’s long-standing independence from political interference.

That separation is seen as crucial to ensure that the Fed is setting interest rates based on what is best for the economy rather than whoever is in the White House.