Trump "races against time": Fires Cook before next week's Federal Reserve meeting

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On the eve of a key interest rate decision by the Federal Reserve, the Trump administration is accelerating its efforts through legal channels to remove Federal Reserve Board member Lisa Cook.

According to court documents filed on Thursday, the U.S. Department of Justice has asked a federal appeals court to intervene and suspend a previous injunction issued by a lower court. The injunction temporarily blocked Trump from firing Cook.

In the documents, the Justice Department stated that the preliminary injunction issued earlier by lower court judge Jia Cobb was “extraordinary” and argued that the decision contained “a series of legal errors” and should be stayed during the appeals process.

The Justice Department contended that the injunction “is at odds with the President’s exercise of his Article II powers.” Article II of the U.S. Constitution vests executive power in the President.

In its motion, the Trump administration urged the Washington appeals court to rule by the close of business on September 15. This timing is pressing, as the Federal Reserve's policy-making body, the Federal Open Market Committee (FOMC), is scheduled to begin its two-day policy meeting the following day (September 16).

The turmoil began last month when President Trump moved to dismiss Lisa Cook. The stated public reason was that federal housing official Bill Pulte accused Cook of alleged mortgage fraud. According to a previous Financial Times report, the Justice Department has launched an investigation into Cook, but the agency has not yet charged her with any wrongdoing.

In response, Cook filed a lawsuit against Trump to block her dismissal. Her lawyers argued that the decision to fire her was based on “unsubstantiated allegations,” and pointed out that this was merely a “pretext,” with the real aim of allowing Trump to ensure a majority of Board members on the Federal Reserve are his own appointees.

The heart of the dispute centers on the scope of the President’s power to fire Federal Reserve Board members. On Tuesday evening, district judge Jia Cobb, presiding over the case, ruled that Cook cannot be dismissed while the related litigation remains unresolved.

Judge Jia Cobb held that the attempt to remove Cook violated the Federal Reserve Act, which stipulates that the President may only remove Federal Reserve Board members “for cause.” The latest motion by the Justice Department directly challenges this decision and the underlying principle of protecting the independence of Federal Reserve Board members.

Subsequent developments in this situation will have a direct impact on how investors and markets assess the independence of U.S. monetary policy.

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