By New York Times

Copyright

A federal appeals court Monday denied a last-minute attempt by President Donald Trump to fire Lisa Cook, a Federal Reserve governor, and prevent her from participating in a crucial two-day Fed meeting to set interest rates.

As a result, Cook will be able to cast a vote at the gathering, which begins Tuesday.

The ruling marked the second legal defeat for Trump in his quest to oust Cook, whom he has accused of engaging in mortgage fraud. Cook has not been charged with a crime.

Trump has moved to stack the central bank with a roster of political loyalists, and separately Monday, he secured confirmation of one of his top advisers to another open slot on the Fed’s board of governors.

The decision from the U.S. Court of Appeals for the District of Columbia Circuit upheld the work of a lower court judge, who temporarily blocked Trump this month from firing Cook while the two sides war over the legality of her potential dismissal.

If Trump had prevailed, Cook’s lawyers warned, it could have rattled financial markets and plunged the politically independent central bank into uncharted waters.

The ruling was supported by two of the three appellate judges, who flagged the risks associated with removing Cook, given that she had continued to serve in her role despite the president’s attempted firing.

“Granting the government’s request for emergency relief would thus upend, not preserve, the status quo,” the judges wrote. “A stay would itself introduce the possibility of ‘the disruptive effect of the repeated removal and reinstatement’ of Cook during this litigation.”

Part of Cook’s defense was that she was also denied adequate time to respond to the allegations before Trump tried to remove her, an argument the judges suggested had a “strong likelihood of success.”

The White House did not immediately respond to a request for comment.

Trump and his top deputies have claimed that Cook falsified records to obtain favorable mortgage terms before her arrival at the Fed. But Cook, who has been neither charged with nor convicted of a crime, sued on grounds that her dismissal was unlawful under the Fed’s chartering statute.

The law allows the president only to dismiss officials at the Fed for cause, typically defined as professional neglect or malfeasance. A judge on the U.S. District Court for the District of Columbia ruled this month that Trump had not met that standard, and could not oust Cook for conduct that occurred unrelated to her duties and before she was confirmed by the Senate in 2022.

A preliminary loan estimate reviewed by The New York Times suggests that Cook did not try to deceive lenders about one of the properties, a home in Atlanta, that she purchased before joining the country’s central bank in 2022. Those documents complicate the administration’s claim that Cook sought to commit fraud and undermines their stated reason for removing her from her role.

This article originally appeared in The New York Times.

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