Washington (AP) – Lisa Cook, governor of the Federal Reserve, will sue President Donald Trump’s government to prevent him from releasing her, her lawyer said on Tuesday.
“President Trump has no authority to remove the governor of the Federal Reserve Lisa Cook,” said Abbe Lowell, a long -time lawyer in Washington who has represented numbers of both gigantic political parties. “His attempt to release it exclusively on a letter of transfer lacks a factual or legal basis. We will submit a lawsuit that question this illegal lawsuit.”
Trump’s unprecedented efforts to fire cook is likely to end at the Supreme Court and could define the limits of the President’s legal authority more clearly for the traditionally independent institution. The FED exerts an wide-ranging power through the US economy by adapting a short-term interest rate that can influence the broader credit costs for mortgages, car loans and business loans.
The Federal Reserve weighs for the first time on Tuesday with the shooting and said that it would “adhere to a court decision”.
The FED also defended its independence from politics: “The Congress indicates through the Federal Reserve that governors serve long, fixed conditions and can only be removed by the president for the cause of the matter,” said the central bank. “Long terms and forces from removal for governors serve as an important protection to ensure that monetary political decisions are based on data, economic analyzes and the long -term interests of the American people.”
However, the explanation of the FED did not answer a key question about Cook: namely whether it continues to operate the Fed while the legal case plays. Trump’s attempt to dismiss her criticized it.
Trump, a Republican, has repeatedly demanded that the chairman Jerome Powell and the Fed interest rate committee have reduced his interest rate to augment the economy and reduce interest payments for the government’s $ 37 trillion.
If Trump succeeds in removing Koch from the Fed Governor Council, this could undermine the political independence of the Fed, which is considered critical of its ability to combat inflation, since the Fed can take unpopular steps such as increasing interest rates. A less independent FED could make Americans pay higher interest rates, since investors would demand a higher return for their own bonds in order to compensate for a potentially higher inflation in the future and to augment the credit costs in the entire economy.
Who is on the board?
Since then, Trump has appeared to have raised his attention to two members of the board in his first term two members of the board, Christopher Waller and Michelle Bowman, and has called Steven Miran, a top economist of the White House, to replace governor Adriana Kugler.
Trump criticized Powell on Tuesday at a cabinet meeting and said: “We will soon have a majority” in the Fed.
The Fed’s board of directors monitors the financial regulations and also coordinates all interest decisions. Five of the 12 regional bank presidents of the FED also have a voice, with one of these five always serving the New York Fed and the other four on a rotating basis.
Right -wing experts say that the Republican President’s claim that he can fire Cook, who was appointed by the democratic President Joe Biden in 2022, is in shaky. But it is an unprecedented move that has not previously played in court, and the Supreme Court this year was much more willing to remove agency officials than in the past.
“It is an illegal dismissal, but the president will argue:” The constitution makes me do it, “said Lev Menand, a legal professor at Columbia University and the author of a book about the fed.” And this argument worked in some other cases this year. “
Menand said the Supreme Court had interpreted the importance of the constitution, and “in this case it can issue a new constitutional law”.
Allegations against Cook
Bill Pult, a Trump -Namen of the agency, which regulates the mortgage giants Fannie Mae and Freddie Mac, made the allegations last week. Pult claimed that Cook claimed two primary residences in Ann Arbor, Michigan and Atlanta in 2021 to receive better mortgage conditions. The mortgage lenses are often higher in second houses or the houses bought for rent.
The most likely next step for Cook is to look for an injunction against Trump’s command that would enable her to continue her work as a governor. But the situation puts the Fed in a complex position.
“You have your own legal obligation to follow the law,” said Menand. “And that doesn’t mean doing what the president says.
Trump said in a letter that was published on his social platform for truth behind schedule Monday that he immediately committed a mortgage fraud due to the allegations she committed.
Cook says she won’t resign
Cook said on Monday evening that she would not resign. “President Trump supposedly released me for reasons of the law if there is no thing under the law, and he has no authority,” she said in an e -mail declaration. “I won’t resign.”
The courts have allowed the Trump government to remove commissioners in the National Labor Relations Board, in the Merit System Protection Board and other independent agencies. Nevertheless, Cook’s case is different.
These layoffs were based on the idea that the president does not need a reason to remove agency heads, since they exercise the power of the executive in his name, the Supreme Court wrote in a non -signed order in May.
In the same order, the Court of Justice proposed that Trump did not have the same freedom in the Fed, which the court called “uniquely structured, quasi-private entity”.
Governors can be removed for reasons of the matter
The law, which regulates the central bank, the Federal Reserve Act, contains a provision that allows the removal of the Fed governors “from the matter”.
“Statement” will usually mean misconduct or breach of duty by an official in office, not something that was created before this person, said Menand.
In order to create a “statement”, a factual finding also requires, said Scott Alvarez, the former General Counsel of the Fed and now additional professor at the Georgetown Law.
“We know that there are allegations from Bill Pulte, but Lisa couldn’t answer yet,” said Alvarez. “So we don’t know if they are true. Allegations are no reason. ”
Lowell said on Monday evening that Trump’s “reflex of Mobby is incorrect and that his demands for proper process, basis or legal authority were missing” and added: “We will take all measures that are necessary to prevent his attempted illegal measures.”
Cook is the first black woman who serves as a governor. She was Marshall scholar and received degrees at the Oxford University and at Spelman College.
___
Mark Sherman and Paul Wiseman, Associated Press Writers, contributed to this report.
