President Donald Trump is looking for a rapid judicial battle on whether the governor of the Federal Reserve, Lisa Cook, can be fired before the next meeting of the Fed on Tuesday, with a Federal Court of Appeals by establishing a schedule on Thursday night that establishes a quick ruling on whether Cook can be removed at least temporarily, and potentially allows the Supreme Court to intervene.
Key data
Trump is appealing a ruling from a lower court that forbids him to say goodbye to Cook, after the president seemed to remove it from the Board due to alleged problems related to his mortgage account states.
The president has appealed this decision and asked a Court of Appeals to block it, to be able to say goodbye to Cook before the closing of Monday’s operations for the meeting of the Federal Open Market Committee, which includes the Board of Governors, on Tuesday.
The Court of Appeals said he plans to adjust to that calendar, announcing on Thursday night that both parties must present all their documents before 3 pm on Sunday. This means that there could be a failure on Sunday night or at any time on Monday.
If the court decides quickly, the loser part (whether Trump or Cook) would have time to request the intervention of the Supreme Court and ask him to pronounce on the dismissal before Tuesday’s meeting.
The president has only requested a temporary suspension of the ruling while the case advances, so the Court’s decision will not be final. Subsequently, the Court of Appeals could issue a more durable ruling that keeps Cook in the position (or restores it if they first authorize a temporary dismissal) or that gives Trump the power to dismiss it.
Find out: an American judge temporarily prevents Trump from dismissed
Why do Trump want to fire Lisa Cook?
Trump has argued that Cook must be dismissed due to accusations made by Bill Ablicte, director of the Federal Housing Financing Agency, who said that Cook incorrectly declared two properties such as his “main residence” in mortgage applications, which could have allowed him to obtain better credit conditions. Cook has denied any irregularity and argues that the president can only dismiss it for misconduct in his role within the Federal Reserve.
Trump has sought to expand his influence on the Federal Reserve – translationally independent – since he assumed the position, repeating it repeatedly to lower interest rates and even insinuating that he could try to dismiss the president of the agency, Jerome Powell.
The dismissal of Cook, designated by former president Joe Biden, is interpreted as a Trump attempt to strengthen his control over the Fed, since he could replace it with someone more aligned to his policies. This would also cause the Board to be mostly composed of its designated.
What could happen at the Fed meeting?
The Federal Open Market Committee (FOMC), composed of the governors of the FED and regional presidents of the reserve banks, will meet on Tuesday and Wednesday of next week to treat the country’s monetary policy.
Until now, the Fed has been reluctant to cut interest rates despite Trump’s pressures. However, Wall Street analysts now consider a cut, citing recent economic indicators such as the unemployment report last week, worse than expected.
The Committee is expected to reduce interest rates in approximately a quarter percentage point, up to 4.1%, according to Associated Press. Even so, this would be less drastic than the cuts requested by the Trump administration.
Why can’t Trump say goodbye to Lisa Cook?
The Jia M. Cobb District Judge determined that Trump cannot dismiss Cook, at least temporarily while the case follows its course, because the law only allows it “with justified cause”, which usually implies a serious fault in the performance of the position.
Unlike other officials of his administration, who can remove for any reason, Trump has a more limited margin regarding the members of the Federal Reserve Board. The Federal Reserve Law establishes that they can only be dismissed “with justified cause.”
Cook alleged in his demand that the supposed mortgage problems do not meet this requirement, since the documents were signed before joining the Fed and are not linked to their official functions. In addition, he said he was not given the opportunity to defend himself properly, which would make dismissal illegal.
Cobb agreed and ruled that the “justified cause” willingness means that the reasons for dismissing a member of the Board of Governors must be related to their conduct in office and the faithful and effective fulfillment of their legal obligations.
Read also: Fed fear index could be pointing more towards a stagnation and not a stagflation
What could the Supreme Court do?
It is not clear. Cook is the most recent in a series of high -profile dismissals promoted by Trump since he assumed the position, including those of members of board of directors that normally operate with political independence.
To date, the Supreme Court has largely confirmed the presidential power to remove these officials, issuing failures that allowed to fire members of the National Labor Relations Board and the Merit Systems Protection Board.
These failures have weakened previous precedents that protected independent boards against the political pressures of a president. However, the judges have suggested that the Federal Reserve enjoys greater independence. In a recent ruling, they pointed out that the Fed is “a quasipreated entity with a unique structure that follows the historical tradition of the first and second United States bank”, and that this case should not be applied to it.
It remains to see if the court, of conservative majority (6-3), will keep Cook in his position or if, on the contrary, he will further weaken the protections of the Board members allowing Trump to dismiss it.
This article was originally published by Forbes US
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