"The ruling, which will almost certainly be appealed, is a blow to the Trump administration's efforts to assert more control over the traditionally independent Fed, which sets short-term interest rates to achieve its congressionally mandated goals of stable prices and maximum employment. Congress has also sought to insulate the Fed from day-to-day politics. Economists prefer independent central banks because they can do unpopular things like lifting interest rates to combat inflation more easily than elected officials."
"Trump said he was firing Cook on Aug. 25 over allegations raised by one of his appointees that she committed mortgage fraud related to two properties she purchased in 2021, before she joined the Fed. Cook is accused of saying two properties were "primary residences," which could have resulted in lower down payments and mortgage rates than if either was designated a second home or investment property."
"Cook's lawyers argued that firing her was unlawful because presidents can only fire Fed governors "for cause," which has typically meant inefficiency, neglect of duty or malfeasance while in office. They also said she was entitled to a hearing and a chance to respond to the charges before being fired, but was not provided either. Her lawsuit denied the charges but did not provide more details."
A federal court allowed Lisa Cook to remain in her Federal Reserve governor position while she challenges President Trump's dismissal, a decision likely to be appealed. The ruling counters efforts to increase White House control over the Fed and underscores statutory protections for Fed independence. Trump cited mortgage fraud allegations tied to two 2021 property purchases as grounds for firing. Cook's attorneys contend presidents may remove Fed governors only "for cause" and that she was denied a hearing and an opportunity to respond. Economists warn politicizing the Fed could lower policy credibility and worsen inflation and long-term borrowing costs.
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