Judge lets Cook stay at Fed while appealing ouster

What happened

A federal court in Washington, D.C., on Tuesday night ruled that economist Lisa Cook can remain on the Federal Reserve Board of Governors while she appeals President Donald Trump’s unprecedented attempt to fire her. U.S. District Judge Jia Cobb said Trump’s claim that Cook committed mortgage fraud before she joined the Fed was not a “legally permissible cause” for her removal and Cook was not given due process to contest the unsubstantiated allegation.

Who said what

Under the 112-year-old law that established the Federal Reserve, presidents can only fire Fed officials “for cause.” And the “best reading of the ‘for cause’ provision,” Cobb said in her ruling, is that it “extends only to concerns about the board member’s ability to effectively and faithfully execute their statutory duties, in light of events that have occurred while they are in office.”

Justice Department lawyers had argued that the president “had expansive powers to determine what constitutes cause and that the court should be ‘highly deferential’ to that interpretation,” The New York Times said. Cobb’s ruling “marked only the first salvo in what is likely to be a lengthy legal battle” over that question. But it was a “blow” to Trump’s “efforts to assert more control over the traditionally independent Fed” in pursuit of sharply lower interest rates, The Associated Press said.

What next?

Cobb’s decision means Cook “will likely be able to participate” in next week’s Fed rate-setting meeting, The Washington Post said, though the White House suggested it would quickly appeal the ruling. The Senate Banking Committee votes today on whether to advance Trump’s nominee for an open Fed seat, White House economic adviser Stephen Miran, meaning he might also participate in next week’s meeting.

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