By Dan Burns
(Reuters) -President Donald Trump’s administration pushed back on Friday against arguments made by Federal Reserve Governor Lisa Cook that his attempted firing of her should not be allowed to proceed, telling the U.S. Supreme Court in a filing that his removal of her would be a valid exercise of his authority.
In limiting a president’s power to remove a Fed governor only for “cause,” U.S. Solicitor General John Sauer wrote, “Congress otherwise respected the President’s constitutional authority over principal officers of the United States by declining to limit him to specific causes or specific removal procedures.”
Cook, the first Black woman to serve as a Fed governor, sued Trump after the president announced last month he would remove her over allegations she committed mortgage fraud, which she has denied. Cook has said the claims made by Trump against her did not give the president the legal authority to remove her and were a pretext to fire her for her monetary policy stance.
Trump has for months demanded the Fed slash interest rates and has hounded the central bank and its leaders for their reluctance to do so. The Fed last week did lower rates by a quarter percentage point, but nothing close to the magnitude of reduction that Trump has called for.
The administration’s filing on Friday came a day after Cook responded to the Republican president’s request last week that the Supreme Court put on hold a lower court’s order keeping her in the job for now.
On Thursday, her lawyers argued in their filing that the Supreme Court is likely to agree that Trump has not met the legal standard for removing Cook with “manufactured charges based on conduct that predates her service on the Board.” They also argued that Trump’s unprecedented move to fire a Fed governor “would destroy the central bank’s independence and disrupt financial markets.”
Sauer in Friday’s filing countered: “Contrary to Cook’s sweeping claims, this case remains narrow: The Federal Reserve’s ‘for cause’ limitation hardly invites ‘boundless’ Presidential removals or ‘sound[s] the death knell’ for its ‘independence.’ Cook’s significant, apparent, and unexplained misrepresentations on financial documents create a grave appearance of impropriety and undermine public confidence in her authority as a financial regulator. That is ample cause to remove her.”
Congress included provisions in the 1913 law that created the Fed to shield the central bank from political interference. Under that law, Fed governors may be removed by a president only “for cause,” though the law does not define the term nor establish procedures for removal. No president has ever removed a Fed governor, and the law has never been tested in court.
The Supreme Court could rule on that matter at any time.
(Reporting by Dan Burns; Editing by Will Dumham)
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