The US Supreme Court allows Lisa Cook to remain at the Fed

The United States Supreme Court prevented the president Donald Trump to proceed immediately with the dismissal of the Federal Reserve Governor Lisa Cookaccused of mortgage fraud, dealing a blow to his expansive interpretation of presidential powers. With a narrow decision, approved with five votes in favor and four against, the Court ruled that the president cannot remove the leaders of the Fed, an independent institution, “for any reason or no reason”.

A mixed verdict on presidential powers

The Supreme Court, at the same time, has granted the president broad powers to remove, without having to provide reasons, the heads of other independent federal agencies. The two decisions, writes the Wall Street Journal, effectively represent a contrasting verdict on Trump’s attempt, in his second term, to strengthen the executive’s control over independent authorities.

Lisa Cook was appointed to the Federal Reserve Board of Governors in 2022 by the then-president Joe Biden. Last August, Trump announced his intention to remove her from office, marking the first attempt in the history of the US central bank by a president to fire a member of the board.

The fraud charges and Lisa Cook’s defense

Trump had motivated the decision by recalling the accusations made by a senior federal real estate official, according to which Cook had made false declarations in 2021 on his main residence to obtain more favorable conditions on a mortgage. The governor has always denied the accusations. His lawyers argue that, in the worst case scenario, it was an involuntary error and that the disputes represent only a pretext to allow Trump to influence monetary policy by appointing people close to him to the Fed board.

Cook then appealed, arguing that the attempted dismissal violated federal law, which states that the president can only remove members of the Federal Reserve “for cause.” Two courts had already ruled in her favor on a preliminary basis, suspending Trump’s provision pending the final decision.

Governor Cook’s reaction

Federal Reserve Governor Lisa Cook welcomed the US Supreme Court’s decision allowing her to remain in office after President Donald Trump’s attempt to remove her. “Today’s decision reaffirms a principle that has underpinned sound economic governance for generations: The Federal Reserve must make all its monetary policy decisions on the basis of data and independent judgment, free from any political interference,” Cook said in a statement.