Trump escalates legal dispute with Federal Reserve's Lisa Cook in the Supreme Court
In a significant turn of events, an appeals court on Monday blocked US President Donald Trump's attempt to oust Federal Reserve Governor Lisa Cook in a divided decision. This move comes after Cook sued Trump in August, claiming that she was being fired over unsubstantiated allegations of mortgage fraud.
The allegations focus on two properties in Michigan and Georgia that are claimed to be Cook's primary addresses. Notably, Bill Pulte, the director of the Federal Housing Finance Agency, raised mortgage fraud allegations against Cook in August. However, it's important to note that there are no publicly available records of these allegations or claims made by any individual.
The case involves improper judicial interference with the President's removal authority of a Federal Reserve official, according to the Justice Department. The department argues that an ethically compromised member should not continue wielding the Federal Reserve's vast powers.
Trump's attempt to oust Cook is the most extraordinary step he has taken to reshape the Federal Reserve since retaking office. If successful, he could nominate another member to complete her term, which expires in 2038. This move could potentially undermine the idea of Fed independence, which is crucial for global financial market stability and the role of the US dollar.
Jerome Powell, the Fed Chair, is a defendant in the case regarding Cook's removal. Under the Federal Reserve Act, Fed officials can only be fired "for cause," but this has never been tested in court. The White House argues that Trump acted within his duty to fire Cook, but the appeals court's decision suggests otherwise.
In a related development, the Fed recently reduced interest rates by 25 basis points during a policy meeting. The Fed signaled it expects to cut rates by an additional 50 basis points this year. However, efforts to tamper with the Federal Reserve's independence could potentially lead to higher interest rates, according to economists.
It's worth mentioning that no Fed official in the 111-year history of the US central bank has been fired. Cook, who has not been charged with a crime, denies the allegations against her. The case is now expected to proceed to a full hearing.
This news article will be updated as more information becomes available. Stay tuned for further developments.
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