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Federal Reserve Governor Lisa Cook doubled down on the legitimacy of her role on the nation’s central bank Wednesday, stressing what she said was the importance of keeping the bank insulated against political pressures — in direct response to President Donald Trump and his months-long effort to fire her.
“Research and experience show that Federal Reserve independence is essential to fulfilling the congressional mandate of price stability and maximum employment,” Cook said Wednesday following nearly two hours of Supreme Court oral arguments, centered on Trump’s attempt to fire her — and more narrowly, whether Cook can remain in her post pending review of her case on its merits.
“That is why Congress chose to insulate the Federal Reserve from political threats, while holding it accountable for delivering on that mandate,” Cook said in a statement.
“For as long as I serve at the Federal Reserve, I will uphold the principle of political independence in service to the American people,” she added.
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Cook’s statement, released shortly after arguments concluded, capped a day in which justices weighed the unprecedented question of whether a president can fire a sitting Federal Reserve governor “for cause” and what process, if any, must accompany such a move.
The case is the first attempt by a president to fire a sitting Fed governor in the 112-year history of the nation’s central bank.
Justices on the high court did not seem inclined to side with Trump’s request to immediately remove Cook from her post as arguments wrapped.
They cited concerns not only about a lack of process and the precedent that could be created by her firing, including the notion of at-will removal, but also on the importance of protecting the independence of the Fed.
Justice Amy Coney Barrett cited issues with “public confidence,” should Trump be cleared to fire a sitting Fed governor without fully explaining or justifying the reasons.
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“We have amicus briefs from economists who tell us that, if [Cook]” is fired, then it “can trigger a recession,” Barrett said. “How should we think about the public interest in a case like this?”
The Federal Reserve System was created by Congress in 1913 as a wholly independent entity, to insulate it from political influence, and from presidents “stacking the deck” with their own nominees.
Justices pressed the Trump administration’s lawyer over what process it believes Cook should be provided to challenge her removal, and cited concerns about the downstream effects of allowing Cook to be fired.
Justice Brett Kavanaugh, meanwhile, stressed the importance of balancing Cook’s conduct and the independence of the Fed. “It’s less important that the president have full faith in every single governor, and it’s more important that the markets and the public have faith in the independence of the Fed from the president and from Congress,” he said.
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Though Trump administration officials have framed the case as narrowly focused on Cook’s removal, the oral arguments were widely expected to be closely watched by major players in financial markets, as several justices noted.
The short-term ripple effects could be felt sooner than later. The next Federal Open Market Committee meeting is slated for later this month, and Cook, barring any eleventh-hour intervention from the high court, will otherwise participate in the meeting as normal.
The fight over Cook’s status is part of a bigger clash looming between Trump and the Fed.
It comes as Trump has repeatedly assailed Fed Chair Jerome Powell and other members of the central bank, criticizing its reluctance to lower benchmark interest rates as aggressively as he would like, deepening the fast-growing fault lines that have routinely pitted Trump against Fed leaders.
Powell said the agency was subpoenaed by the Justice Department last week over allegations that he lied to Congress about the costs of a massive renovation of its headquarters.
Powell also attended Wednesday’s hearing in a show of support for Cook.
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