A three-judge appeals court panel voted 2-1 on Monday night to allow Federal Reserve Gov. Lisa Cook to continue working at the central bank, rejecting a request by the Trump administration to stay a district court’s earlier ruling.
That means Cook will be able to participate in Tuesday’s meeting of the Federal Open Market Committee, which sets interest rates.
Writing for the majority, Judge Brad Garcia – a Biden appointee – focused not on whether President Donald Trump had cause to fire Cook but that she was dismissed “without providing a constitutionally adequate opportunity to respond.”
“In balancing the equities, we have held – in terms that squarely apply here – that the government may not ‘prioritize any policy goal over the Due Process Clause,’” Garcia wrote Monday, in an opinion joined by Judge J. Michelle Childs, a fellow Biden appointee.
The “policy goal” quote is a citation from a 2020 case. But in the Cook matter, the policy goal could arguably refer to what Cook’s lawyers contend is Trump’s primary motive for removing the Fed governor: eliminating a central bank official who has historically voted against the president’s well-publicized desire to lower the interest rate.
Absent from Garcia’s opinion is the word “mortgage.” The judge does not address the Trump administration’s mortgage fraud allegations against Cook. Nor does he reference media reports that surfaced Friday, indicating that Cook described one of the properties in question as a “vacation home.”
Judge Gregory Katsas, in a dissenting opinion, does broach the topic.
“The President plainly invoked a cause relating to Cook's conduct, ability, fitness, or competence," wrote Katsas, a Trump appointee. "The allegations against Cook could constitute mortgage fraud if she acted knowingly, and that is a felony offense. Moreover, even absent intentional misconduct, any misstatements in formal applications for six-figure loans are at least concerning. And the President specifically concluded that the allegations cast doubt on Cook's 'competence and trustworthiness as a financial regulator.' That is plainly a permissible 'cause'” to fire her under the Federal Reserve Act.
Further, if Fed governors were entitled to a hearing before removal, Katsas wrote, such a challenge could take years.
“And that would enable a potentially compromised Governor to engage in significant governmental action — such as voting on whether to adjust interest rates, which Cook says she must do tomorrow,” Katsas wrote.
Katsas further asserted that if Cook were barred – even temporarily – from the interest rate meeting, the harm wouldn’t be irreparable because she could receive back pay if she eventually were to win the case.
Garcia, meanwhile, wrote that granting a stay – and thus allowing Trump to exclude Cook from Tuesday’s FOMC meeting – would “introduce the possibility of ‘the disruptive effect of the repeated removal and reinstatement’ of Cook during this litigation.”
“Granting the government’s request for emergency relief would … upend, not preserve, the status quo,” he wrote.
The White House on Tuesday indicated it would appeal Monday’s ruling – presumably to the Supreme Court.
“The president lawfully removed Lisa Cook for cause,” Kush Desai, a White House spokesperson, said in a statement seen by Bloomberg. “The administration will appeal this decision and looks forward to ultimate victory on the issue.”
Federal Housing Finance Agency Director Bill Pulte, who raised the mortgage fraud allegations against Cook, posted on X the lead paragraph of an Associated Press story on Monday’s ruling, along with the text: “For now.”
Sen. Elizabeth Warren, D-MA, trumpeted the ruling in a statement Monday.
“The courts keep rejecting Donald Trump’s illegal attempt to take over the Fed so he can scapegoat away his failure to lower costs for American families,” she wrote. “If the courts – including the Supreme Court – continue to uphold the law, Lisa Cook will keep her seat as a Fed Governor.”
