The US Supreme Court has blocked President Donald Trump’s attempt to fire a governor of the US central bank, in a ruling seen as affirming the Federal Reserve’s independence.
In a 5-4 decision, justices from the country’s top court said the administration had not provided Federal Reserve Governor Lisa Cook sufficient “due process” for her to contest her removal.
The decision sends the matter back to lower courts, where the administration will have to prove its allegations that Cook has committed mortgage fraud if it wishes to proceed with the firing and where Cook would have a chance to challenge the accusation.
Cook has denied the allegations, which Fed defenders say are a pretext to allow Trump to assert more control over the bank.
By law, a president can only remove governors of the Federal Reserve “for cause”.
That requirement was intended to shield the bank from political pressure and help ensure it sets policy to serve long-term economic goals, rather than short-term interests.
Arguing before the court in January, Cook’s lawyer, Paul Clement, said the administration’s handling of the firing would make Congress’ intended protection for the Fed “kind of a joke”.
Trump announced his plan to remove Cook from the Fed in August on social media, citing claims that she had filed mortgage forms claiming two different principal residences at the same time. Banks typically offer lower interest rates for primary homes.
Solicitor General John Sauer, who argued the case for the White House, told the court in January that the social media post provided sufficient notice and opportunity to respond.
He said the issue, even if inadvertent, amounted to “negligence” that could undermine confidence in the Fed and said the courts should defer to the president’s judgement when it comes to finding a cause.
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