"Must be fired immediately" — Trump-pressured Fed board member Cook... latest update

Fed board member Lisa Cook will retain her position through January next year

Federal court, on the 1st: "Can remain in post until January"

Trump: "Cook committed mortgage fraud and must be fired"

Criticism that the personnel decision is aimed at seizing control of the Fed

The U.S. Supreme Court on the 1st (local time) ruled that Federal Reserve (Fed) board member Lisa Cook may retain her position until oral argument in January next year.

President Trump repeatedly asked federal courts to allow him to remove Cook immediately despite her pending lawsuit seeking to nullify the removal, but all requests were denied. President Trump argued that Cook committed mortgage fraud as grounds for removal.

Cook denied allegations that she made false statements during the mortgage application processes for homes in Michigan and Georgia. She has not been formally charged with any crime. The Supreme Court briefly stated that it would "hold in abeyance President Trump's request to stay the federal district court ruling (prohibiting removal) until oral argument in January next year." A date for the oral argument has not yet been set. The court added that it will set a schedule for filing briefs to allow third parties to submit amicus briefs.

The Trump administration's attempt to remove Cook has been assessed as a potentially significant precedent that could determine whether the Fed's political independence is preserved. President Trump contends that the allegations against Cook meet the statutory standard for removal under the Federal Reserve Act.

Cook's attorneys, Abbe Lowell and Norm Eisen, issued a statement after the Supreme Court's ruling saying, "The court made the right decision, allowing Director Cook to continue her role on the Fed's board," and added, "We look forward to the subsequent proceedings following the court's decision."

White House spokesman Kush Desai said in a statement, "President Trump lawfully removed Lisa Cook for legitimate reasons," and "We expect a final victory after the Supreme Court's oral argument in January next year." The Fed reiterated its prior position that it will comply with the court's decision and declined further comment.

In August, President Trump notified Cook of her removal, alleging mortgage fraud related to loans during the previous Biden administration's appointments. Although misconduct was cited as the reason, there were also criticisms that the move was a personnel decision intended to 'seize' the Fed, where independence is highly valued.

However, in response to Cook's challenge, on the 9th of last month the trial court ruled that the fraud allegations cited by President Trump did not constitute sufficient grounds for removal because they allegedly occurred before Cook became a Fed board member. On the 15th of last month, the appellate court found that the Trump administration had violated Cook's due process rights by not providing her a formal opportunity to respond to the allegations. The Department of Justice then asked the Supreme Court on the 18th of the same month to at least temporarily stay the lower court rulings that allowed Cook to remain in her post.

This Supreme Court ruling allows Fed operations to proceed normally through the end of the year. Cook can participate in votes at the October and December FOMC meetings, and even the January meeting. The Fed cut the policy rate by 0.25% percentage point at the September meeting, and indicated it may signal an additional 0.25% percentage point cut at the two remaining meetings this year.

Cook, despite Trump's opposition, participated in those meetings and cast votes in favor of rate cuts. By contrast, Trump-appointed board member Steven Myron voted against, favoring a 0.5% percentage point cut.

Myron also indicated on the individual rate-projection dot plot that he preferred an additional 1.25% percentage point cut by year-end. Cook did not state a separate position, but like Chair Powell has supported gradual and cautious easing.

New York=Park Shin-young, correspondent nyusos@hankyung.com