Lisa Cook has told the United States Supreme Court that markets could crash if they let President Trump go ahead with her firing. The warning came in a filing, where Lisa and her lawyers kicked against efforts to fire her over alleged mortgage fraud, noting that it could also rid the Fed of its independence.
In the filing, they claimed that firing her now could lead to chaos and disruption and even open the door to a legal mess where two different people start to fight for the same Fed seat. The filing was in response to the Justice Department’s emergency request on September 18, asking the Court to immediately lift a lower judge’s ruling that had blocked Lisa’s removal.
Trump claimed she lied on her home mortgage applications, and it was enough reason to fire her. However, Lisa, who’s still actively participating in monetary policy decisions, argued that the accusations don’t meet the legal bar in the Federal Reserve Act. In the court filing, Lisa’s team said the president’s request to remove her immediately “would sound the death knell for the central-bank independence that has helped make the United States’ economy the strongest in the world.” Without limits, they argued, any governor could be removed over any weak accusation, turning the Fed into a political tool.
Fed veterans and economists push against Lisa Cook’s firing
On Thursday, former Federal Reserve chairs Ben Bernanke, Alan Greenspan, and Janet Yellen sent their message to the Court. They asked the court to stop this before it does long-term damage. “Allowing the government to remove a member of the Board of Governors for the first time in the Nation’s history, while under the cloud of legal challenge, will erode public confidence in the Fed’s independence and threaten the long-term stability of our economy,” a joint letter said.
As previously reported by Cryptopolitan, the letter was also co-signed by former Treasury secretaries Larry Summers, Robert Rubin, Jacob Lew, and Henry Paulson, along with Kenneth Rogoff, the former chief economist at the International Monetary Fund, and ex-Fed governor Daniel Tarullo. They noted that letting Trump fire Lisa now, while the court battle is still underway, would crush the Fed’s ability to act without political pressure.
The issue has already passed through two lower courts. On September 9, Judge Jia Cobb stopped Trump from firing Lisa, saying the White House’s accusations didn’t meet the legal requirement of “for cause” under the law. Then on September 15, the D.C. Court of Appeals backed Cobb’s decision in a 2–1 vote, rejecting the White House’s attempt to overturn the block. However, instead of waiting, Trump pushed the fight straight to the highest court. His lawyers want the block lifted now, and Lisa removed before the rest of the case even plays out.
Her legal team has warned that if the Court sides with Trump, it could create a situation where someone else is nominated to her seat, while her case is still active, putting two people in the same role at once. Despite the court drama, Lisa has continued her job, joining the Fed Board’s latest policy meeting last week, where she voted to cut interest rates by 25 basis points. The vote happened while Trump’s team was still trying to push her out. Lisa hasn’t backed down publicly and has made it clear that she won’t resign.
