US President Donald Trump has appealed to the Supreme Court to dismiss Fed Board Member Lisa Cook.
Trump’s emergency appeal today has brought discussions about the independence of the central bank back to the agenda, and this step is said to be of historic importance for the US economy.
The request, notably, came just one day after the Fed cut interest rates for the first time in months. If Trump’s request is accepted, it would be the first time in the 111-year history of the Fed that a president has removed a sitting member from office.
The Trump administration alleged ethical violations by Cook in its filing. Allegedly, Cook claimed to have obtained more favorable mortgage terms by declaring two separate homes as his “primary residence.” Some documents also revealed that he had declared his second property as a “vacation home.” Trump announced his dismissal of Cook on August 25, but on September 10, U.S. District Judge Jia Cobb invalidated the dismissal. Cobb stated that Trump had failed to prove that Cook had caused any harm to his position at the Fed or to the public good.
The Trump administration quickly appealed the decision, but an appeals court also rejected the request to halt the process. The case, which now stands before the Supreme Court, could set a precedent for both the Fed’s independence and the power the president can wield over the central bank.
Meanwhile, Trump has long criticized Fed Chair Jerome Powell for his high-interest rate policies. Critics argue that the real purpose of Cook’s ouster is to put pressure on the Fed and accelerate the rate cut process.
*This is not investment advice.