The US Supreme Court has blocked President Donald Trump’s attempt to fire the governor of the US central bank, in a decision seen as an affirmation of the Federal Reserve’s independence.
In a 5-4 decision, the justices of the nation’s top court said the administration had not provided Federal Reserve Governor Lisa Cook with adequate “due process” to contest her removal.
The decision sends the case back to lower courts, where the administration must prove its allegations that Cook committed mortgage fraud if it wants to move forward with dismissal and where Cook will have a chance to challenge the charge.
Cook has denied the allegations, which Fed defenders say are a ruse to allow Trump to assert greater control over the bank.
By law, a President can remove a Federal Reserve governor only “for cause.”
That requirement was intended to protect the Bank from political pressure and to help ensure that it set policy to meet long-term economic goals rather than short-term interests.
Arguing before the court in January, Cook’s attorney, Paul Clement, said the administration’s handling of the firing would make Congressional-intended protections for the Fed “kind of a joke.”
Trump announced his plan to remove Cook from the Fed on social media in August over claims that she had filed mortgage forms claiming two different principal residences at the same time. Banks typically offer lower interest rates for primary residences.
Solicitor General John Sawyer, who prosecuted the case for the White House, told the court in January that the social media posts provided ample notice and opportunity to respond.
He said the issue, even if unintentional, amounts to “negligence” that could undermine confidence in the Fed and said courts should defer to the president’s judgment when it comes to finding causation.
