Supreme Court lets Lisa Cook remain as a Federal Reserve governor for now

The court will consider whether to block a lower-court ruling in Cook's favor while her challenge to her firing by Trump continues.

The high-court order was a rare instance of Trump not quickly getting everything he wants from the justices in an emergency appeal.

Cook will be able to take part in the remaining two Fed meetings in 2025, including the next meeting of its interest rate-setting committee in late October.

Separately, the justices are hearing arguments in December in a separate but related legal fight over Trump’s actions to fire members of the boards that oversee other independent federal agencies. The case concerns whether Trump can fire those officials at will.

But a second issue in the case could bear directly on Cook’s fate: whether federal judges have the authority to prevent the firings or instead may only order back pay for officials who were wrongly dismissed.

Trump had sought to oust Cook before the September meeting of the Fed’s interest rate-setting committee. But a judge ruled that the firing was illegal, and a divided appeals court rejected the Trumps administration’s emergency appeal.

A day after the meeting concluded with a one-quarter of a percentage point reduction in a key interest rate, the administration turned to the Supreme Court in a new emergency appeal.

The White House campaign to unseat Cook marks an unprecedented bid to reshape the Fed board, which was designed to be largely independent from day-to-day politics. No president has fired a sitting Fed governor in the Fed's 112-year history.

“President Trump lawfully removed Lisa Cook for cause from the Federal Reserve Board of Governors. We look forward to ultimate victory after presenting our oral arguments before the Supreme Court in January,” White House spokesman Kush Desai said.

The court already has suggested that it will view the Fed differently from other independent agencies and Wednesday's order is another demonstration of that distinction, said Lev Menand, a professor at Columbia Law School and author of a book on the Fed.

The justices have allowed other firings to take effect while legal challenges proceed, including in the case that will be argued in December involving Rebecca Slaughter, whom Trump fired from the Federal Trade Commission.

“The court seems to be steering a different course here,” Menand said. “It has the effect of freezing the status quo that is in favor of Fed independence.”

Cook, who was appointed to the Fed board by Democratic President Joe Biden, has said she will not leave her job and won’t be “bullied” by Trump. One of her lawyers, Abbe Lowell, has said she “will continue to carry out her sworn duties as a Senate-confirmed Board Governor.”

Separately, Senate Republicans recently confirmed Stephen Miran, Trump’s nominee to an open spot on the Fed’s board. Both Cook and Miran took part in last month's meeting. Miran was the sole dissenting vote, preferring a larger cut.

Trump has accused Cook of mortgage fraud because she appeared to claim two properties, in Michigan and Georgia, as “primary residences” in June and July 2021, before she joined the Fed board. Such claims can lead to a lower mortgage rate and smaller down payment than if one of them was declared as a rental property or second home.

“Put simply, the President may reasonably determine that interest rates paid by the American people should not be set by a Governor who appears to have lied about facts material to the interest rates she secured for herself — and refuses to explain the apparent misrepresentations,” Solicitor General D. John Sauer wrote in his Supreme Court filing.

Cook has denied any wrongdoing and has not been charged with a crime. According to documents obtained by The Associated Press, Cook specified that her Atlanta condo would be a “vacation home,” according to a loan estimate she obtained in May 2021. In a form seeking a security clearance, she described it as a “2nd home.” Both documents appear to undercut the administration’s claims of fraud.

U.S. District Judge Jia Cobb ruled that the administration had not satisfied a legal requirement that Fed governors can only be fired “for cause,” which she said was limited to misconduct while in office. Cook joined the Fed’s board in 2022.

Cobb also held that Trump’s firing would have deprived Cook of her due process, or legal right, to contest the firing.

By a 2-1 vote, a panel of the federal appeals court in Washington rejected the administration’s request to let Cook’s firing proceed.

Trump’s lawyers have argued that even if the conduct occurred before her time as governor, her alleged action “indisputably calls into question Cook’s trustworthiness and whether she can be a responsible steward of the interest rates and economy.”

AP Economics Writer Christopher Rugaber contributed to this report.

Follow the AP’s coverage of the Federal Reserve System at https://apnews.com/hub/federal-reserve-system.