Central bank governor's legal team suggests allowing Trump to oust her would roil markets and prove a 'death knell' for Fed autonomy
Lawyers representing Federal Reserve governor Lisa Cook said President Trump risked triggering “chaos and disruption” in financial markets by attempting to remove her as the legal saga between the president and central bank rumbles on.
Cook’s legal team asked the Supreme Court to allow her to stay in her job even amid Trump’s efforts to fire her, arguing that her dismissal would mark “the death knell for central-bank independence that has helped make the United States’ economy the strongest in the world.”
Trump said in late August that he was dismissing Cook over allegations of fraud related to mortgages she took out on two properties before her role at the Fed began.
But Cook filed a lawsuit against the president days later, describing that move as “illegal” and the allegations against her as unsubstantiated.
A lower court has ruled that Cook is likely to win that lawsuit, but the Trump administration has pressed the Supreme Court to allow the president to remove her while it challenges the ruling.
However, Cook’s legal team argued in its latest filing to the Supreme Court that the administration “understood the chaos” her firing might cause in financial markets because it delayed that request until after the Fed’s last meeting on interest rates, which took place on September 16-17.
Trump has already installed one loyalist at the Fed this year with the appointment of Stephen Miran to the central bank’s board of governors, replacing Adriana Kugler who unexpectedly resigned over the summer.
In August, he suggested replacing Cook would allow him to appoint another official whose view on rate policy aligned with his own. “We’ll have a majority very shortly, so that’ll be great once we have a majority, and housing is going to swing,” he said.
This week, influential former economic policymakers including former Fed chairs Alan Greenspan and Ben Bernanke, as well as former Treasury secretaries Janet Yellen, Timothy Geithner, and Henry Paulson, urged the Supreme Court to allow Cook to remain in her post while the legal drama plays out.
Allowing her removal, they argued, “would expose the Federal Reserve to political influences, thereby eroding public confidence in the Fed’s independence and jeopardizing the credibility and efficacy of US monetary policy.”
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