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Administration seeks to halt judge's ruling to keep Cook at Fed

Mark Schoeff Jr., CQ-Roll Call on

Published in News & Features

WASHINGTON — Lawyers for President Donald Trump are seeking to block a federal judge’s decision to allow Federal Reserve Governor Lisa Cook to remain on the Fed board while courts consider her lawsuit against Trump.

The Department of Justice filed a motion Thursday in a Washington federal court to stop a preliminary injunction ordered by U.S. District Judge Jia Cobb earlier this week. Cobb’s ruling stopped Trump’s attempt to fire Cook over alleged mortgage fraud.

The administration moved to halt Cobb’s decision while it appeals to the U.S. Court of Appeals for the District of Columbia. It asked for a decision by Monday.

“That extraordinary order countermanding the President’s exercise of his Article II authority rests on a series of legal errors and should be stayed pending appeal,” the administration motion says. “The Supreme Court has established that the balance of equities favors the government when a district court reinstates a removed principal officer.”

Depending on the outcome before the appeals court, the stay could be escalated quickly to the Supreme Court.

The Fed meets next week to determine interest rates. As a board member, Cook is on the rate-setting Federal Open Market Committee.

The Cook case is moving through the courts while the Senate considers the nomination of Stephen Miran for an open Fed seat. The Senate is scheduled to vote Monday night on cloture and on confirmation.

Miran is expected to be confirmed despite Democratic concerns about his potential conflicts of interest. He has said that if confirmed, he intends to take an unpaid leave of absence from his job as chairman of the Council of Economic Advisers rather than resign the post.

 

The activity swirling around the Fed comes as Cook and Democrats say Trump is trying to undermine its independence. Trump has been pressuring Fed Chair Jerome Powell to lower rates.

Cobb’s order said Trump lacked sufficient cause to remove Cook under the law that established the Fed. She also said he had violated her due process rights.

Cobb held that Trump could not remove Cook because her allegedly misleading mortgage applications occurred before she joined the Fed. She said the “best reading” of the “for cause” provision of the Fed law is that the removal of a board member is limited to grounds based on the member’s action in office.

The administration argued that Supreme Court precedent allows discretion that is not reviewable when a “for cause” provision does not specify what constitutes cause. It also argued that Trump had appropriate cause for removing Cook.

“Regardless of whether that misconduct occurred before or during office, it indisputably calls into question Cook’s trustworthiness and whether she can be a responsible steward of the interest rates and economy for the whole Nation,” the motion says.

In citing Supreme Court precedent for backing the administration in removing agency officers, the motion referred to a case this year centering on the dismissal of members of the National Labor Relations Board and the Merit Systems Protection Board.

In its ruling on that case, the Supreme Court suggested the president may not have as much latitude in firing Fed members as he does at other agencies. “The Federal Reserve is a uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States,” the Supreme Court decision says.


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