Appeals court steps in ahead of crucial Fed meeting
Federal Reserve governor Lisa Cook will remain on the central bank’s Board of Governors for now after a US appeals court on Monday rejected president Donald Trump’s attempt to remove her.
In a 2–1 decision, the US Court of Appeals for the DC Circuit declined to lift a temporary injunction that blocked Cook’s removal. Judges Bradley Garcia and J. Michelle Childs ruled that Cook was likely to succeed on her claims that the firing violated her constitutional right to due process. Judge Gregory Katsas dissented.
The ruling upheld a September 9 decision by US District judge Jia Cobb, who found that the allegations brought against Cook likely were not sufficient grounds for removal under the law that created the Fed, Reuters reported.
The administration can still appeal the case to the US Supreme Court ahead of the Federal Open Market Committee’s next policy meeting.
Allegations of mortgage fraud
The dispute stems from claims that Cook misrepresented her residence status in order to secure favorable mortgage terms on properties in Atlanta, Georgia, and Ann Arbor, Michigan.
Administration officials, led by Federal Housing Finance Agency (FHFA) director Bill Pulte, alleged that Cook claimed both properties as primary residences. Cook has denied wrongdoing.
Documents reviewed by Reuters show that Cook described her Atlanta condominium as a “vacation home” in a May 2021 loan estimate. In a December 2021 security-clearance form, she listed the condo as a “second home.”
Fulton County tax records show Cook never claimed a homestead exemption for the Atlanta property, which is generally used for primary residences. In Ann Arbor, local officials said there is “no evidence” that Cook violated property tax rules. Assessor Jerry Markey told Reuters that temporary absences or short-term rentals do not disqualify homeowners from claiming a principal residence exemption.
Legal arguments
Cook’s attorneys argued that the removal effort was politically motivated and based on “cherry-picked social media posts from the FHFA director that collapse under basic scrutiny.”
The Trump administration maintained that presidents have broad authority to remove officials for cause. But Cook’s lawsuit contended that the charges did not meet the legal threshold of “for cause,” a term Congress used in creating the Federal Reserve but did not explicitly define.
Fed independence at stake
The case has drawn national attention because it touches on the independence of the Federal Reserve, whose governors traditionally serve fixed terms and cannot be removed except for proven misconduct or neglect of duty.
The appeals court ruling means Cook will remain in office at least until further action by the Supreme Court. She is expected to participate in the Fed’s next policy meeting, where officials are set to discuss the future path of interest rates.
