Trump Administration Seeks to Remove Fed’s Lisa Cook
The Trump administration has requested that the Court of Appeals remove Lisa Cook from the Federal Reserve before the central bank’s upcoming interest rate vote on Monday.
This move highlights the White House’s determination to influence the board ahead of the federal interest rate committee’s meetings scheduled for Tuesday and Wednesday. Meanwhile, Senate Republicans are urging President Trump to confirm Stephen Milan as a candidate for the open spot on the Federal Reserve board, which could happen as soon as Monday.
Trump attempted to dismiss Cook on August 25, but a federal judge ruled late Tuesday that this was illegal, thereby reinstating her on the board. Prior to her appointment in July 2021, Trump accused Cook of mortgage fraud, suggesting that she had improperly claimed two properties as “major residences.” This could lower down payment requirements, as properties classified as second homes or rentals usually have different criteria. Cook has refuted these allegations.
On Tuesday, U.S. District Judge Jia Cobb concluded that the administration did not satisfy the legal criteria for firing her, which requires that a removal be “for cause.” Cook has been part of the Fed’s board since 2022.
In their emergency appeal, Trump’s attorneys argued that Cook’s alleged actions prior to her directorship raise doubts about her credibility and whether she can responsibly manage interest rates and the economy.
The administration has asked the Court of Appeals for an emergency ruling to reverse the lower court’s decision by Monday. If the appeal is granted, Cook would be removed from the board during the legal proceedings, causing her to miss the upcoming meeting.
If the Court of Appeals upholds Cook’s position, the administration may seek an emergency ruling from the Supreme Court.
Regardless, the Fed is expected to reduce benchmark interest rates by approximately 4.1% next week. Lowering rates generally reduces borrowing costs for mortgages and loans over time, and some rates have already declined in anticipation of this adjustment.
If Milan gains approval in time to join the Fed next week, he might advocate for a more substantial half-point rate cut.
There are seven members on the Fed’s board and 12 officials who vote on interest rate decisions, including five of the Fed’s regional bank presidents who rotate voting duties.
Two other Trump appointees, Christopher Waller and Michelle Bowman, could also be in favor of a half-point cut. However, some regional bank presidents have voiced concerns about persistent inflation, likely opposing such a significant reduction.
Should the Fed decide on a quarter-point cut, there may be dissent from both those who disagree with the cut and those who favor a half-point reduction.
