Federal Reserve Governor Lisa Cook is urging an appeals court in the U.S. to decline the latest request of the Trump administration to oust her from her position before the next interest rate set by the central bank.
In a court filing on Saturday, attorneys representing Lisa Cook requested that the court deny an emergency petition by the Trump administration to overturn a lower court decision that had lifted a stay on the removal of Lisa Cook as Governor of the Federal Reserve Board.
Lisa Cook’s lawyers argue that the Trump administration has not provided valid grounds for her dismissal. They warn that allowing the President to remove a Federal Reserve Governor without cause could endanger the economy and the country’s stability.
The filing stated that, “A stay by this court would therefore be the first signal from the courts that our system of government is no longer able to guarantee the independence of the Federal Reserve. Nothing would then stop the president from firing other members of the board on similarly flimsy pretexts. The era of Fed independence would be over. The risks to the nation’s economy could be dire.”
The court allowed President Trump’s administration to respond to Cook’s filing by 3 pm Eastern on Sunday.
The main conflict centers on whether the Trump administration can succeed in its attempt to remove Cook before the Federal Reserve’s rate-setting meetings, while Senate Republicans work to confirm a Trump nominee for an open Fed Board seat as soon as Monday.
President Trump has also charged Lisa Cook with mortgage fraud, noting that before becoming a board member in July 2021, she had presented two homes as her “primary residence.” These assertions may result in a reduced mortgage rate and reduced down payment compared to declaring one of them as a rental house or a second home.
Lisa Cook has refused the accusations made by President Trump and filed a lawsuit against the Trump administration to prevent her termination.
The U.S. District Court Judge Jia Cobb, on Tuesday, determined that the administration had failed to meet a legal test that Fed governors could, for cause,” only be dismissed on grounds of misconduct in office, which she argued was confined to misconduct in office. Cook was not elected to the board of the Fed until 2022.
The administration subsequently requested that the decision be appealed and that an emergency ruling be made overturning the lower court decision by Monday. In the emergency appeal, President Trump’s lawyers claimed that the “indisputably calls into question Cook’s trustworthiness and whether she can be a responsible steward of the interest rates and economy.”
Assuming the appeal by the Trump administration is successful, then Cook would be stripped from the Fed Board until the final adjudication of her case in the court, and she would skip the next Fed meeting next week, during which the interest central bank would decide whether to lower its key rate.
The administration may request an emergency decision at the Supreme Court, in case the court declares in favor of Cook in the appeal. President Trump is pressuring the Fed to reduce rates; therefore, the rates have been kept at the same position by the central bank since the end of 2024 due to the fear that the Trump administration, with unpredictable tariff policies, will spark inflation again.
Fed Chair Jerome Powell indicated last month that Fed officials were growing worried about weaker hiring, paving the way to a rate cut next week. The majority of economists believe that the Fed will reduce its main interest rate by a quarter-point to approximately 4.1.
By lowering its key rate, the Fed usually, in the long run, slows down the cost of borrowing money in the form of mortgages, car loans, and business loans. The Fed is already expected to make cuts, and some of those rates have already dropped.
