The opinion was published just as the Senate voted 48-47 to confirm White House Council of Economic Advisers Chair Stephen Miran to an unexpired term on the Fed board that expires in January. Miran said he would take a leave of absence from his position at the CEA during his Fed term. Both Cook and Miran are expected to participate at the Federal Open Market Committee's September meeting, which begins Tuesday. 

Writing for the majority of the three-judge panel, Judge Brad Garcia — appointed to the court by President Biden — said judicial precedent broadly understands that the "for cause" protections were written into the statute to serve a purpose, and that the purpose is to assure the public that the management and direction of the agency in question will not change from administration to administration. 

"The reason a statute providing 'for cause' protection from removal creates a property interest is that it supports an objective basis for believing that the employee will remain employed unless they do something warranting their termination," Garcia said. "Here, the plain purpose of providing for-cause protection was to assure members of the Board of Governors — and national and global markets — that they do not serve at will and thus enjoy a measure of policy independence from the President."

Trump's motion to stay the lower court injunction had argued that leaving Cook on the Fed board would create a greater harm than removing her pending the outcome of her legal challenge. But the appeals court's opinion counters that argument, stating that the president's interest in pursuing his policy objectives is not greater than Cook's constitutional right to not be deprived of property without due process.

"Cook's constitutional claim suggests only that the President cannot remove her without providing a constitutionally adequate opportunity to respond. The harm to the government in this case is better viewed as the inability to remove a for-cause-protected official without following the Due Process Clause's basic dictates," Garcia's opinion reads. "In balancing the equities, we have held — in terms that squarely apply here — that the government may not prioritize any policy goal over the Due Process Clause."

Notably, the majority opinion does not address the question of whether Trump's reasons for removing Cook amount to legitimate "cause" for her removal, finding instead that the abridgement of Cook's due process rights alone is sufficient reason to deny the motion to stay.

In a dissenting opinion, DC Circuit Judge Greg Katsas — appointed by President Trump in 2017 — said that the president's motion to stay should be granted precisely because the cause that gave rise to Cook's termination fit squarely within the broad understanding of misconduct, and thus allowing her to remain on the Fed board constitutes an abridgement of the president's authority to remove officials who do not invite public trust.

"The President plainly invoked a cause relating to Cook's conduct, ability, fitness, or competence," Katsas argued. "The allegations against Cook could constitute mortgage fraud if she acted knowingly, and that is a felony offense. Moreover, even absent intentional misconduct, any misstatements in formal applications for six-figure loans are at least concerning. And the President specifically concluded that the allegations cast doubt on Cook's 'competence and trustworthiness as a financial regulator.' That is plainly a permissible 'cause' under section 242" of the Federal Reserve Act.

The lawsuit originated in August, after Federal Housing Finance Agency Director Bill Pulte published on social media a screenshot of a criminal referral to the Department of Justice alleging that Cook — who was first appointed to serve on the Fed Board by President Biden in 2022 — had claimed primary residence on two separate mortgages taken out in 2021. 

Trump later said he would "fire" Cook if she didn't resign, and Cook replied that she had no intention of doing so. Trump then published on social media a screenshot of a letter to Cook informing her that he was removing her from the Fed board because of the allegations, "effective immediately."

Cook filed suit against Trump and the Fed, arguing that the reasons for her removal fall outside of the commonly understood definition of "cause" and deprived her of a material property interest, given that she had no formal recourse to rebut the accusations made against her. She included the Fed in her lawsuit to ensure that the central bank would allow her to retain her position and responsibilities pending the outcome of the suit. The Fed has stated that it will abide by any court ruling.

The DC District Court last week issued an injunction against the president and the Fed, finding that Cook's arguments on the meaning of "for cause" protections and her right to due process favor her interest in remaining on the Fed board in the interim.

Trump's attorneys quickly filed a motion to the DC Circuit Court seeking a stay of the lower court's injunction before the beginning of this week's Federal Open Market Committee meeting, arguing that the lower court erred in determining that the Federal Reserve Act's "for cause" protections imply dereliction of official duties and that Cook's property rights are infringed by her termination. The appeal also argued that the president's Article II power to faithfully execute the laws includes discretion to determine what constitutes "cause" for removal, and that those discretionary choices are not reviewable by the judiciary.

Cook's attorneys replied in their motion opposing an emergency stay that the government is not challenging the constitutionality of the "for cause" protection in the Federal Reserve Act, but is nonetheless asking a court to "render that protection meaningless" by asserting that the president is unencumbered by the courts or Congress in deciding what offenses constitute cause for removal. 

"Worse still, the government asks the Court to abdicate its role in a case in which the attempted removal was announced without affording any notice or opportunity to be heard — contrary to both the statute and constitutional due process," Cook's reply reads. "That would transform the Federal Reserve from a historically independent institution into an at-will body, leaving the nation's central bank (and its monetary policy) at the mercy of the White House and its political whims. That is the opposite of what Congress intended."

Cook's brief also cites news reports from over the weekend that mortgage documents related to one of the two homes for which Cook is alleged to have claimed as primary residence on her mortgage application indicate that the property was intended to be used as a second home, undermining the president's argument that Cook is guilty of impropriety. The motion argued that the president's actions gave Cook no meaningful opportunity to challenge the accusations made against her, and that procedural abridgement amounts to a deprivation of her rights. Cook has not been charged with any crime.

"Governor Cook was deprived of a forum in which to offer any evidence," Cook's attorney, Abbe Lowell, said in his brief challenging the motion for a stay. "The government seems to blame her for that shortcoming, stating she never 'sought to offer any evidence . . . that would explain her actions.' It cannot be the case that deprivation of due process is harmless unless the person informally raises her arguments ahead of the proceeding to which she is entitled."