By Dan Burns
(Reuters) -A group of 18 former U.S. Federal Reserve officials, Treasury secretaries and other top economic officials who served under presidents from both parties urged the Supreme Court on Thursday to reject President Donald Trump‘s petition to allow his unprecedented attempt to fire Fed Governor Lisa Cook to stand.
The group included the past three Fed chairs – Janet Yellen, Ben Bernanke and Alan Greenspan – as well as former Treasury secretaries Henry Paulson, Lawrence Summers, Jacob Lew, Timothy Geithner and Robert Rubin. In a brief to the Supreme Court, they argued that letting the Republican president remove Cook while her legal challenge to Trump’s action is ongoing would threaten the U.S. central bank’s independence and erode public confidence in it.
Both a district court judge and an appellate court – by a 2-1 vote – have rejected Trump so far.
Trump’s administration asked the top U.S. judicial body on September 18 to let him move ahead with firing Cook, an appointee of his Democratic predecessor Joe Biden, in a move without precedent since the Fed’s founding in 1913. The Justice Department asked the Supreme Court to lift U.S. District Judge Jia Cobb’s order temporarily blocking Trump’s action.
In the amicus – or “friend-of-the-court” – brief, the group wrote that “the balance of equitable factors, and in particular consideration of potential harms to the public, weighs heavily in favor of denying the stay application because premature removal of a Governor would undermine the public’s confidence in the independence of the Federal Reserve.”
“The risk of harm to the Federal Reserve’s longstanding reputation for independence – and the ensuing harm to the economy – more than justifies maintaining the status quo by keeping Governor Cook in her position while the legality of her removal is adjudicated,” they added.
The filing came hours before Cook’s response is due to Trump’s request to the Supreme Court.
Cobb ruled that Trump likely lacked sufficient cause to fire her over so-far-unproven allegations of mortgage fraud before she took office – allegations she denies – related to properties she owns in Georgia and Michigan, under the law that created the Fed. A federal circuit court later reasoned that Trump fired her without sufficient due process but did not address the question of cause.
Members of the Fed board are appointed by a president and confirmed by the Senate, but the Federal Reserve Act of 1913, as amended, states that they can only be removed by a president “for cause.” No president before Trump, a persistent critic of the Fed and its leadership who regularly demands a large cut in interest rates, has ever tried to remove a Fed governor.
Trump last month announced he was firing Cook over allegations made by his director of the Federal Housing Finance Agency, William Pulte, that she improperly listed her properties in Georgia and Michigan both as her primary residence in obtaining refinanced loans in 2021 before she took office.
No charges have so far been filed associated with it, and Reuters reported that Cook had in other documents associated with her mortgage application declared her Georgia property as a vacation home, potentially undercutting Pulte’s accusation.
The amicus brief filers do not address the accusations at the center of Trump’s effort to fire her, instead focusing on the legislative history of the Fed’s creation to argue it was the explicit intent of Congress to insulate the central bank from political pressures and that allowing the firing would lead to dire economic consequences, especially higher inflation.
“Any reduction in the Federal Reserve’s well-earned reputation of independence would hamper its ability to influence independent decisionmakers and could ultimately lead to greater inflation,” they wrote. “The same outcome will follow from actions that appear to politicize its membership or erode its ability to engage in monetary policymaking free from political influence.”
(Reporting by Dan Burns; Editing by Will Dunham)