Trump seeks ruling on Cook injunction before FOMC meeting

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  • Key insight: The White House filed an appellate brief asking the DC Circuit Court to overturn an injunction granted by a lower court this week allowing Federal Reserve Gov. Lisa Cook to remain on the board pending the outcome of her suit challenging her dismissal by Trump.
  • Expert quote: The brief argues that the lower court's acknowledgement that prior conduct could serve as "cause" for removal shows that "pre-office misconduct is not categorically off limits." 
  • Forward look: The brief asks the appeals court to issue a ruling barring Cook from her duties at the central bank pending the outcome of the case before the next Federal Open Market Committee meeting on Sept. 16 and 17.  

The White House has filed a brief requesting an appeals court to overturn a lower court injunction allowing Federal Reserve Gov. Lisa Cook to remain in office pending the outcome of her challenge to President Trump's moves to fire her.

The brief specifically asks the U.S. Court of Appeals for the DC Circuit to issue a ruling "on or before Sept. 15, 2025" — the day before the next Federal Open Market Committee meeting is slated to begin on Sept. 16.

The White House had filed a notice earlier Thursday that it would appeal the lower court ruling, which was published late Tuesday night. In the brief supporting its position, the White House said that the lower court erred in determining that the "for cause" protections in the Federal Reserve Act — which prohibit a president from removing an official at will — imply that removal must concern official conduct while in office. 

"The district court … erroneously held that the President lacked statutory authority to consider Cook's actions at all because they occurred before she took office," the appellate brief reads. "But if Congress had wanted to limit cause to only in-office conduct, it easily could have drafted language to that effect, as it has done in other statutes."

The brief goes on to say that the district court itself posited that there could be circumstances where a Federal Reserve governor's prior actions could serve as cause for removal, such as if a Fed governor were convicted of a past crime and sentenced to prison. The acknowledgement that any such instances could serve as cause for removal renders the remainder of the ruling moot, the brief said. 

"The court's acknowledgment that the President may consider preoffice misconduct if it results in extreme consequences underscores that pre-office misconduct is not categorically off limits," the brief said. "And once it is agreed that the President may properly remove a Governor based on such misconduct, the district court had no authority to inquire further."

The brief also said that the Supreme Court's May ruling barring a member of the National Labor Relations Board from office pending the outcome of her suit challenging her own dismissal was misconstrued by the district court. While that ruling acknowledged the unique structure and duties of the Fed as a reason why its ruling in the NLRB case would not necessarily be the same for a removed central bank governor, the White House said that the regulatory and supervisory functions of the Fed are derived from the executive and thus subject to presidential removal.

 

"Under 'our constitutional structure' the Governors' rulemakings and adjudications 'must be exercises of the 'executive Power,' which the President must constitutionally oversee," the brief said. "The President and the government are … unquestionably harmed when a removed officer is reinstated and continues to serve notwithstanding the President's removal."

Cook's purported removal from office came after Federal Housing Finance Agency Director Bill Pulte sent a criminal referral to the Department of Justice in August alleging that Cook had claimed primary residence on two separate mortgages taken out within weeks of each other in 2021 — before she was nominated and confirmed by the Senate to serve on the Fed board. Pulte later posted a screenshot of the referral on social media, spurring Trump to suggest that he would remove her from office if she didn't resign. Trump then posted a screenshot a few days later showing a letter to Cook informing her that he had fired her from the Fed Board, with the allegations of mortgage impropriety serving as his reason.

Cook promptly filed a lawsuit challenging her removal, arguing that the Federal Reserve Act's "for cause" protections have long been understood by courts to mean that officials can only be removed for actions or inactions taken by her in her official capacity. Cook further argued that even if her prior actions were sufficient to remove her, mere allegations of misconduct are not sufficient grounds for her removal.

The district court ruling favoring Cook's reinstatement pending the outcome of the suit agreed with Cook, finding that the contemporary understanding of "for cause" when the language was added back into the Federal Reserve Act in 1935 would have meant a dereliction of official duty. 

"The best reading of the 'for cause' provision is that the bases for removal of a member of the Board of Governors are limited to grounds concerning a Governor's behavior in office and whether they have been faithfully and effectively executing their statutory duties," the district court opinion said. "'For cause' thus does not contemplate removing an individual purely for conduct that occurred before they began in office."


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