Supreme Court keeps Fed’s Cook in place, sets January hearing

WASHINGTON - The Supreme Court will take up a legal challenge by Federal Reserve Board member Lisa Cook to President Donald Trump's attempt to remove her, but allow her to keep her seat while the case proceeds.

The court said it has scheduled a January hearing for oral arguments. It deferred until then a request from the Trump administration to stay a lower court preliminary injunction that has enabled Cook to remain at the Fed.

"The Court's decision rightly allows Governor Cook to continue in her role on the Federal Reserve Board, and we look forward to further proceedings consistent with the Court's order," Cook's lawyers, Abbe David Lowell and Norm Eisen, said in a statement.

Trump attempted to remove Cook from her seat in August, alleging mortgage fraud and citing his authority under Article II of the Constitution and the Federal Reserve Act.

Cook filed a lawsuit against Trump, arguing he denied her due process and threatened the Fed's independence while trying to gain control of its board.

The case could determine how much power the president has over the Fed at a time when Trump has been pressuring Fed Chairman Jerome Powell to lower interest rates.

The Fed's Federal Open Market Committee voted to bring down rates at its mid-September meeting. Cook participated in that meeting, as did Stephen Miran, who was confirmed by the Senate just before the gathering. Cook and Miran both voted to lower rates.

Miran, who is taking an unpaid leave of absence from his job as chairman of the White House Council of Economic Advisers, is seen as a reliable vote for Trump on monetary policy. Cook has often sided with Powell in votes to raise or keep rates steady.

Cook's lawyers say Trump is attempting to take over the Fed, which was designed to operate without political influence.

"The President's stay application asks this Court to act on an emergency basis to eviscerate the independence of the Federal Reserve Board," Cook's lawyers said in a Supreme Court filing on Sept. 25. "For decades, the Board's insulation from direct presidential control has allowed the American markets and economy to thrive. And as the Court recognized earlier this year, the Board's independence is uniquely entrenched in the Nation's history and tradition."

The court suggested in a ruling in May in a separate case that there are limits on a president's ability to fire a member of the Fed.

Trump has asserted that Cook listed multiple properties as primary residences on mortgage applications, saying that was reason enough to fire her. Cook's lawyers have denied the allegations.

The Trump administration argues that Congress gave presidents the authority to remove principal officers without limiting them to particular causes or procedures.

"Following the statute, President Trump duly removed respondent Lisa Cook for ‘deceitful and potentially criminal conduct in a financial matter' that renders her unfit to serve on the Nation's preeminent financial policymaking and regulatory body-a quintessential cause for removal," the Department of Justice argued in a Sept. 26 filing at the Supreme Court.

The Fed statute says Fed officials can be removed "for cause" but doesn't define cause.

"The best reading of the ‘for cause' provision is that the bases for removal of a member of the Board of Governors are limited to grounds concerning a Governor's behavior in office and whether they have been faithfully and effectively executing their statutory duties," U.S. District Judge Jia Cobb wrote in a Sept. 9 order granting Cook the preliminary injunction. "In addition, the Court finds that the removal also likely violated Cook's procedural rights under the Fifth Amendment's Due Process Clause."