Judge Blocks Removal, Case Heads to U.S. Supreme Court, Cook May Participate in Fed’s September Policy Vote

The judge pointed out that Cook's side has convincingly demonstrated that her removal violated the "for cause removal" clause in the Federal Reserve Act. Analysis indicates that unless the appellate court stays the ruling, Cook will be able to participate in the September interest rate meeting. Many observers believe that the Trump administration will almost certainly appeal again, and the final battleground for this lawsuit will be the U.S. Supreme Court.

Written by: Li Xiaoyin

Source: Wallstreetcn

Defending the independence of the Federal Reserve! The process of Trump "removing" Fed Governor Cook has been halted.

According to media reports, on Tuesday evening local time, Judge Jia Cobb of the U.S. District Court for the District of Columbia issued the latest ruling, blocking the Trump administration's attempt to "remove" Federal Reserve Governor Lisa Cook.

At the same time, the judge also granted Cook's request and issued a temporary restraining order. This means that before the case is further reviewed, Cook will not be removed from the Federal Reserve Board, allowing her to attend and vote at next week's Federal Reserve monetary policy meeting.

However, legal uncertainty is far from eliminated. The judge's decision is only "temporary," opening the door to a lawsuit that could last for months.

According to CCTV News, on August 25 local time, U.S. President Trump publicly released a letter to Federal Reserve Governor Lisa Cook on his social media "Truth Social," announcing her immediate dismissal. The letter mentioned an August 15 criminal referral submitted by the Federal Housing Finance Agency, alleging that Cook made false statements in mortgage documents.

Defending the independence of the Federal Reserve, a major setback for the Trump administration's "dismissal" attempt

In the ruling, Judge Jia Cobb made it clear that Cook's side has convincingly demonstrated that her removal violated the "for cause removal" clause in the Federal Reserve Act. The judge stated:

"'For cause removal' does not mean that someone can be dismissed solely for actions that occurred before taking office."

The ruling further pointed out that the removal action may also violate Cook's due process rights under the Fifth Amendment of the U.S. Constitution.

The statement also emphasized, "The public interest in the independence of the Federal Reserve favors Cook's reinstatement," adding that "such independence is crucial for promoting the stability of the national banking system."

Jia Cobb concluded:

"She has demonstrated that removal would cause irreparable harm. Finally, the balance of public interest and equity also favors Cook."

Cook's attorney, Abbe David Lowell, stated in a statement that the ruling "recognizes and reaffirms the importance of protecting the Federal Reserve from unlawful political interference."

Temporary injunction in effect, Cook retains her position and voting rights

The core of this case lies in the temporary injunction issued by the judge.

Wallstreetcn previously mentioned that when Cook appealed the case, she expressed hope that a U.S. judge would issue a temporary restraining order—to prevent Trump and other defendants from taking action during the litigation, thereby preventing her dismissal from taking effect, maintaining the status quo of the Federal Reserve, and protecting the interests of the American public.

This move provides Cook with a legal shield, allowing her to continue fulfilling her duties as a Federal Reserve Governor without facing the immediate risk of removal.

Earlier this year, the U.S. Supreme Court hinted in a ruling that the president's power to dismiss Federal Reserve Governors is limited and that members of the Federal Reserve Board are afforded special protections. This district court ruling is a reaffirmation of that principle.

However, the key to this ruling is its temporary nature. The report also uses the term "for now" to highlight this, indicating that this is not a final judgment but is intended to maintain the status quo during the litigation.

Analysts generally believe that the current ruling is limited to Cook's short-term tenure, but the Trump administration will almost certainly appeal again.

Next step: Appeal and Supreme Court showdown

Cook's legal battle is far from over.

Bloomberg Industry Research senior litigation analyst Elliott Stein stated that the ruling was in line with market expectations and that Cook is also expected to win the preliminary ruling in the D.C. Circuit Court of Appeals.

Given the high sensitivity of the case and its far-reaching impact on the boundaries of future executive power, many observers believe that the final battleground for this lawsuit will be the U.S. Supreme Court. At that time, the ruling of the nine justices will set a decisive legal precedent for this case.

Stein added that unless the appellate court stays the execution of this ruling, Cook will be able to attend the Federal Reserve's rate-setting committee meeting from September 16 to 17. He believes that, given the judge configuration for handling emergency motions is favorable to Cook, "the D.C. Circuit Court is not expected to stay this ruling." At the same time, it is unlikely that the case will be submitted to the Supreme Court before next week's Federal Reserve meeting.

Looking further ahead, Stein believes that when the case eventually reaches the Supreme Court, it will be "a more evenly matched contest" for Cook.