It was an unprecedented attack on the independence of the US Federal Reserve: the discharge of FED-Gouverneur Cook. After a court had suspended the dismissal, Trump is now moving to the Supreme Court.
In the dispute over the dismissal of a governor of the US Federal Reserve Fed, US President Donald Trump pulls in front of the Supreme Court. He asks the highest US court to suspend the decision of a lower instance that has previously prevented him from dismissing Lisa Cook.
If the Supreme Court agrees to take over the more comprehensive case, this could lead to a pioneering decision about how independently the most powerful central bank of the world is of the US executive. Cook asked the Supreme Court to reject Trump’s application, whereby her lawyers argued that their dismissal would undermine the independence of the Fed and damage the US economy.
“To temporarily remove it from your post, would threaten the economic stability of our country and raise questions about the continuing independence of the Federal Reserve – and risk shock waves on the financial markets that could not simply be reversed,” they wrote in a submission, cited from the Financial Times.
Courts decided against discharge
Trump wants to get rid of the Fed governor due to allegations that she had committed mortgage fraud. So far, however, courts have been holding it out: Last week, a court in the US capital Washington had temporarily put a stop to his project. The judge responsible in the case said that the US President may only relieve a member of the FED board “for valid reasons”. So someone could not be released solely due to behaviors from the time before taking office. She also wrote that the public interest in the independence of the Fed spoke for Cooks reinstatement.
Trump did not want to accept that and therefore turned to an appellate court. A few days ago, however, this also decided in favor of cooks that their discharge would continue to be blocked.
How it came to the legal dispute
The US President had announced last month to relieve Cook with immediate effect from her office. His reasoning: There are sufficient reasons for the assumption that it had given incorrect information in one or more mortgage contracts.
Cook then announced legal steps through her lawyers. Trump shouldn’t call her down at all, argued Cook. She denied the allegations. Cook continued, even if she should have unknowingly made false information, this was done years before taking office at the Fed when taking a private mortgage.
Power struggle between Trump and Fed
Trump has been putting pressure on the Fed for a long time. He also demanded several times the resignation of the current FED leader Jerome Powell – although it is still unclear whether he can actually fire him. Legally, it is not finally checked whether a president may dismiss the central bank manager.
The FED is of great importance worldwide. The Central Bank of the United States is aimed at contributing to the US financial stability.
