President Donald Trump has asked the U.S. Supreme Court to allow him to fire Federal Reserve Governor Lisa Cook while he fights Trump's attempt to oust her. This has drawn the justices into a high-profile legal battle that has major implications for the independence of the U.S. central bank.

The Justice Department asked the court on Thursday to at least temporarily delay a Washington federal judge's ruling allowing Cook to remain in office for the time being. The emergency request comes after the Fed held its final meeting earlier this week, which Cook attended.

Last month, Trump said he fired Cook after Federal Housing Finance Agency Director Bill Pulte accused her of fraudulently listing homes in Michigan and Georgia as her "primary residence" when she obtained a mortgage in 2021 to secure more favorable loan terms. Cook has denied mortgage fraud and remains in office.

U.S. Attorney General D. John Sauer wrote in his petition Thursday that the lower court's ruling constitutes "another case of inappropriate judicial interference with the President's removal powers."

The Justice Department's latest move comes after a federal appeals court voted 2-1 ahead of the Fed meeting to temporarily suspend Cook. The appeals court's order did not address the underlying mortgage fraud claim against Cook, nor did it address reports over the weekend that loan documents for Cook's Georgia home appeared to contradict Pulte's claims, indicating that he told the lender the property was a vacation home.

The Supreme Court's conservative majority has largely sided with Trump this year by allowing him to fire federal officials, but the dispute over Cook's position at the Fed represents an untested area with the potential for monumental consequences for the U.S. economy. The high court cited the Fed's distinct position as a "uniquely structured, quasi-private entity" in an order earlier this year in a separate case involving Trump's firing of officials at another independent agency.

U.S. District Judge Jia Cobb sided with Cook on September 9. The judge ruled that Cook, appointed by former President Joe Biden, was likely to win his claim. She argued that Trump failed to meet the U.S. legal requirement that his firing be "for cause" with unproven mortgage fraud allegations from before his term.

Cobb, who is also a Biden presidential candidate, wrote that when Congress adopted the "for cause" language in the Federal Reserve Act, they intended it to relate to the governors' conduct while in office and "whether they have faithfully and effectively discharged their statutory duties."

Cobb alleged that Trump's move to oust him was part of a politically motivated pattern. The Justice Department has agreed throughout the legal proceedings that policy differences alone do not qualify as a legal reason. Trump has repeatedly and publicly expressed frustration with the board's slow pace of lowering interest rates and criticized Fed Chairman Jerome Powell.

Cobb also argued that Trump likely violated Cook's constitutional right to due process by attempting to fire him through a social media post that didn't give him a meaningful opportunity to challenge the allegations.

The majority of the Washington appeals court indicated that it based its decision on the due process question and found that Cook would likely prevail on at least that issue. The justices did not address the substance of his argument about why Trump lacked "just cause" to fire him. (alg)

Source: Bloomberg