Supreme Court keeps Fed's Lisa Cook in role for now, agrees to review case

The Supreme Court on Wednesday agreed to review President Donald Trump's effort to fire Federal Reserve Governor Lisa Cook, and will allow her to remain in her spot on the board until the court can review the case in January, the court said - delivering a near-term setback to Trump in his push to remove Cook from the nation's central bank. 

The Supreme Court's decision to let Cook remain on the Fed board while it reviews the case is significant. In recent months, justices have overwhelmingly sided with Trump on emergency stay requests while underlying cases moved forward.

It also underscores the profound economic and political stakes at the heart of Cook's case: Trump is the first president in the nearly 112-year history of the Federal Reserve to attempt to fire a sitting governor.

At issue is whether Trump has met the "for cause" requirement in the Federal Reserve Act, which sets the legal threshold for removing a Fed official.

Oral arguments are expected to be closely watched, given the unprecedented nature of the dispute and the potential seismic impact on U.S. economic policy.

In appealing the case to the Supreme Court, lawyers for the Trump administration argued that the Fed's "uniquely important role" in the U.S. economy only heightens the government's and public's interest in reviewing the case.

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"Put simply, the president may reasonably determine that interest rates paid by the American people should not be set by a governor who appears to have lied about facts material to the interest rates she secured for herself - and refuses to explain the apparent misrepresentations," Solicitor General D. John Sauer said Thursday in the appeal.

Trump's attempt to fire Cook marked the first time in the bank's history that a president has ever attempted to remove a sitting governor from Fed - a stridently independent body whose members are shielded by law against political pressures.

The court's decision to take up the case comes weeks after U.S. District Judge Jia Cobb issued a preliminary injunction last month blocking Trump from firing Cook from the Fed while the case continued to play out in court.

She ruled that Trump had failed to satisfy the stringent requirements needed to remove a sitting Fed governor "for cause" under the Federal Reserve Act - a law is specifically designed to shield members from the political whims of the president or members of Congress - and that Cook could not be removed for conduct that occurred prior to her appointment to the Fed.

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The U.S. Court of Appeals for the D.C. Circuit voted 2-1 in September to deny Trump's request for intervention, prompting the administration to kick the case to the Supreme Court for emergency review.

The Supreme Court update comes as Trump has for months pressured the Federal Reserve to slash interest rates, in a bid to help spur the nation's economic growth. 

But his attempt to fire Cook for alleged mortgage fraud violations, which she has denied, has teed up a first-of-its-kind court clash that could have profound impacts on the Fed. 

They've also been the center of a heated, months-long court fight. Cook's lawyers argued that Trump's attempt to fire her just several years into her 14-year term is merely an attempt to install a nominee of his choosing to the Fed and secure a majority on its board. 

Trump, they said, has not satisfied the "for cause" provision required by the Federal Reserve Act (FRA) for a president to remove a member from the nation's central bank. 

Cook sued Trump in late August for his attempt to fire her, arguing that his removal violated her due process rights under the Fifth Amendment, as well as her statutory right to notice and a hearing under the FRA. 

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The Supreme Court has sided with Trump on similar cases in the past.

The Supreme Court in May allowed Trump to proceed with the provisional firings of two independent board members - National Labor Relations Board member Gwynne Wilcox and Merit Systems Protection Board member Cathy Harris - two Democrat appointees who were abruptly terminated by the Trump administration.

But even that decision sought to differentiate these boards from the Fed, which they stressed was a "uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States."

In December, the justices will hear oral arguments in a related case over Trump's effort to remove Federal Trade Commission member Rebecca Slaughter.

The court's approach in the Slaughter case may signal how it will handle Trump's attempt to oust Cook the following month.

The next Fed board meeting is set for Oct. 28-29, and Cook will again be permitted to participate.

White House officials signaled optimism about the case Wednesday, reiterating to reporters their assertion that Trump's firing of Cook was both "lawful" and "for cause." 

"We look forward to ultimate victory after presenting our oral arguments before the Supreme Court in January," White House spokesman Kush Desai said in a statement.