Supreme Court Petition Filed by White House Seeks Immediate Action to Remove Federal Reserve Governor Cook
The Trump administration has escalated a confrontation with the Federal Reserve's independence by seeking the U.S. Supreme Court's intervention to remove Fed Governor Lisa Cook from the central bank's board. This move comes amidst an ongoing legal battle that has seen various twists and turns.
Chief Justice John Roberts, in a recent ruling, blocked the US Department of Justice's effort to remove Fed Governor Lisa Cook from the Supreme Court. Cook's term on the Fed's board extends until 2038, and she was appointed by former President Joe Biden, making her the first Black woman to serve on the Fed's board of governors.
The legal battle centres on the presidential removal authority regarding Cook's position on the Fed's board. The U.S. District Judge Jia Cobb ruled earlier this month that Trump's mortgage fraud allegations against Cook were likely insufficient grounds for removal under federal law governing the Fed.
The Justice Department's filing to the Supreme Court comes after a federal appeals court rejected the administration's efforts to oust Cook. Cook's lawyers contend that the president lacks authority to remove her from the position.
In a break from decades of precedent, Trump aims to insulate the central bank from direct political pressure. However, this approach has been met with resistance, as the Federal Reserve is an institution designed by Congress to operate independently of short-term political pressures while conducting monetary policy.
The White House has installed Stephen Miran as a new Fed governor, despite the ongoing legal battle to remove Lisa Cook. Miran, a former Harvard and Stanford economist, dissented from the committee's decision to cut interest rates by 25 basis points, advocating instead for a deeper reduction.
This week's Fed policy session saw a quarter-point rate cut being approved. Cook, in her capacity as a Fed governor, voted with the majority to approve the rate cut. Following the meeting, Jerome Powell, the Fed Chair, emphasized the Fed's commitment to maintaining its independence.
The Trump administration has downplayed official reports and dismissed at least one official responsible for overseeing economic data collection, further fuelling concerns about political interference in the Fed's operations.
The Supreme Court case will test the boundaries of presidential authority over the Federal Reserve, potentially setting a precedent for future administrations. As the legal battle unfolds, Trump pursues plans to build a majority on the Fed's board, a move that could significantly alter the course of monetary policy in the United States.
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