Lisa Cook will remain as a Fed Governor.
US President Donald Trump had tried to fire Federal Reserve Governor Lisa Cook from her role over a primary residence disclosure on a mortgage application. The Governor claimed it was a clerical error and that she was fired without due process.
Cook’s term on the Board of Governors doesn't expire until 2038.
Trump has been looking to pack the Fed but it's not going well and it doesn't look like the Fed is going to have any latitude to cut rates anyway.
When he fired her, he said he had “reason to believe” that she “may have made false statements on one or more mortgage agreements.” He told her that he lacked “confidence in [her] integrity” and that he had determined that “faithfully executing the law requires [her] immediate removal from office," according to the judgement.
The reasoning was fairly broad and takes some power from the White House.
The Government first contends that the President’s determination of “cause” is wholly unreviewable because the statute “commits the determination of cause to” the President alone. ... The Court sees no such commitment.
The decision was 5-4 so it was a close one. The Court’s narrowest ground is procedural: Cook was entitled to notice and some opportunity to respond before removal. The Court did not decide whether alleged mortgage fraud would be sufficient cause to remove Cook. It says the facts have not been found or analyzed under the proper standard.
The Court left open whether serious private misconduct, including pre-office mortgage fraud, could qualify as cause if proven and linked to fitness for the role.
The swing votes were Kavanaugh and Roberts.
Notably, this story doesn't appear to be over.
Bill Pulte, who is the US Director of Federal Housing and Acting Director of National Intelligence quickly tweeted:
As I have repeatedly said, I believe Lisa Cook will be indicted for mortgage fraud.
Pulte has long been leading this chart.
If indicted and/or convicted that could clear the 'cause' section.
Aside from the Fed, the Court separately ruled that Presidents have free rein to fire agency heads at will. Federal laws require a cause for such dismissals and in doing that, the court reversed a 91-year-old decision that had limited executive authority. So in making this decision, the Supreme Court decided that the Fed was a unique agency and the rules that apply to other agencies around independence don't apply to it.
Update: Cook is out with a statement saying the decision affirms the need for real process and real cause and that Fed independence is essential to Congressional mandates.
Full statement:
"This was never about mortgage documents signed years before I became a Federal Reserve governor. It was an attempt to remove me on a manufactured pretext because I refused to bow to political pressure and continued to set interest rates based only on what would best serve the American people. That is the most fundamental obligation of a Federal Reserve governor. Today's ruling affirms a principle that has underpinned sound economic stewardship for generations: that the Federal Reserve must make all its policy decisions guided by evidence and independent judgment, free from political interference. This bedrock principle has guided the Federal Reserve since its founding.
"The Supreme Court's decision to leave the lower court's order in place and affirm the need for real process and real cause recognizes that Federal Reserve independence is essential to fulfilling the congressional mandate of price stability and maximum employment. I am grateful for this decision, not for my own sake, but for the sake of the American people, whose economic well-being depends on a central bank that answers to its mission, not political intimidation. For as long as I serve at the Federal Reserve, I will continue to uphold the principle of political independence in service to all Americans."
Strong stuff.
