Federal Reserve Governor Lisa Cook asked for an emergency injunction to block President Donald Trump's attempt to fire her over alleged mortgage fraud tied to a 2021 home and condo purchase. She was appointed to the Fed board in 2022. Allowing the removal would likely erode the Fed's independence, which economists view as necessary to take unpopular steps like raising interest rates to fight inflation. No president has fired a Fed governor in the agency's 112-year history. Federal law bars removal for disagreement over rate policy but allows firing 'for cause' such as inefficiency or malfeasance. Cook's lawyers argue 'cause' applies only to misconduct while in office and that the unproven pre-confirmation mortgage-form allegation does not constitute cause. The case may reach the U.S. Supreme Court.
A case that could provide the Trump administration with new and expansive power over the traditionally independent Federal Reserve will get its first court hearing Friday. If her firing is allowed to stand, it would likely erode the Fed's longstanding independence from day-to-day politics. No president has ever fired a Fed governor in the agency's 112-year history. Economists broadly support Fed independence because it makes it easier for the central bank to take unpopular steps such as raising interest rates to combat inflation.
The law governing the Fed says the president can't fire a governor just because they disagree over interest rate policy. But the president may be able to fire a Fed governor 'for cause,' which has traditionally been interpreted to mean inefficiency, neglect of duty, or malfeasance. Cook's lawyers argue that it also refers only to conduct while in office. They also say that she was entitled to a hearing and an opportunity to rebut the charges.
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