The US Supreme Court said Wednesday that it will hear arguments in January on Donald Trump's attempt to fire Federal Reserve Governor Lisa Cook, who will remain in office for the time being, setting up a major legal battle over the first attempt by a president to fire a Federal Reserve official because she challenges the central bank's independence.

The justices declined to immediately rule on a Justice Department request to stay a judge's order temporarily blocking the Republican president from firing Cook, an appointee of Democratic former President Joe Biden. The court postponed resolution of the request until the justices hear arguments.

In establishing the Fed in 1913, Congress passed a law called the Federal Reserve Act that included a provision to protect the central bank from political interference, requiring governors to be removed by the president only "for cause," although the law does not define that term or establish a procedure for removal. The law has never been tested in court.

Washington-based U.S. District Judge Jia Cobb ruled on September 9 that Trump's claims that Cook committed mortgage fraud before taking office, which Cook denies, are likely insufficient grounds for removal under the Federal Reserve Act.

Cook, the first Black woman to serve as a Federal Reserve governor, sued Trump in August after the president announced he would fire her. Cook said Trump's claims against her do not give the president legal authority to fire her and are a pretext to dismiss her because of her monetary policy stance.

The Supreme Court's action on Wednesday "rightfully allows Governor Cook to continue her role on the Federal Reserve Board, and we look forward to further proceedings consistent with the court's order," Cook's attorneys, Abbe Lowell and Norm Eisen, said in a statement.

"President Trump rightfully removed Lisa Cook for cause from the Federal Reserve Board of Governors. We look forward to a final victory after presenting our oral arguments before the Supreme Court in January," said White House spokesman Kush Desai. The U.S. Court of Appeals for the District of Columbia Circuit, in a 2-1 ruling on September 15, denied the administration's request to suspend Cobb's order.

The Supreme Court, in a series of decisions in recent months, has allowed Trump to dismiss members of various federal agencies that Congress has designated as independent from the president's direct control, despite similar employment protections for those positions.

These decisions suggest that the court, which has a 6-3 conservative majority, may be ready to discard a landmark 1935 precedent that upheld these protections in a case involving the U.S. Federal Trade Commission.

In Cook's case, however, the court chose to hear arguments first before ruling on the Justice Department's request to similarly dismiss Cook as a preliminary injunction.

The court has signaled that it may treat the Fed differently from other executive branch agencies, noting in May in a case involving Trump's firing of two Democratic federal labor board members that the Fed "is a uniquely structured, quasi-private entity" with unique historical traditions.

Based on arguments in January, the court will decide whether Cook can remain in office or must leave while his legal challenge to his dismissal continues in lower courts. At this early stage in the case, the justices have not yet ruled on the substance of the claim. The court has not set a specific date for the case, but arguments are scheduled for two weeks in mid-January. (alg)

Source: Reuters