The case arrives as the Fed chair discloses a probe he says is tied to interest rate pressure
Federal Reserve chair Jerome Powell plans to attend oral arguments Wednesday at the Supreme Court in a case challenging President Trump’s authority to fire Fed governor Lisa Cook, according to a person familiar with the situation who spoke to CNBC.
The case centers on Trump’s August decision to remove Cook from the seven-member Fed Board of Governors, citing allegations that she committed mortgage fraud connected to two homes she owns. Cook denies any wrongdoing and has not been charged with any crime.
Cook sued Trump in federal court in Washington, DC, seeking to block her removal. A district court judge barred Trump from firing her on Sept. 9 as the lawsuit continued, and a federal appeals court upheld that order. The Supreme Court will now review the case.
Powell’s planned attendance comes as he faces a criminal investigation by the US attorney’s office in Washington, regarding a multibillion-dollar renovation of the central bank’s headquarters and his congressional testimony about the project, according to CNBC.
In an extraordinary public statement on January 11, Powell revealed the investigation and called its purported grounds a pretext for what he described as its real reason: the Fed Board of Governors’ refusal to lower interest rates as quickly as Trump demanded last year.
“The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President,” Powell said in the statement.
Legal experts told The New York Times the investigation into Powell could complicate the Trump administration’s case before the Supreme Court. Lev Menand, a Columbia University law professor, said the move against Powell “undermines the administration’s contention that this is all about Lisa Cook’s conduct and not about her votes on monetary policy.”
The Department of Justice argues in court filings that Trump has cited valid cause to fire Cook and that the court cannot second-guess the president’s specific reason. The department called lower court orders barring Cook’s removal “yet another case of improper judicial interference with the President’s removal authority,” according to Supreme Court filings.
Central bank governors serve staggered 14-year terms and can be removed only “for cause by the president,” according to federal law. Congress established these protections in 1913 and renewed them in 1935 to ensure the Federal Reserve’s independence from political interference.
