(Reuters)-A hearing about the attempt by US President Donald Trump, dismissing Federal Reserve Lisa Cook’s director, ended on Friday without any immediate judge who is judging the legal dispute unprecedented, which means that the US Central Bank monetary policy formulator will remain in office for now.
After hearing oral arguments for two hours at a court in Washington, DC, US district judge Jia Cobb asked director’s lawyers to report a report on Tuesday, more in detail her arguments about the illegality of dismissal.
The case, which will probably be brought to the US Supreme Court, has branches for the Fed’s ability to define interest policy without taking into account politicians’ wishes, which is widely considered to be fundamental to the Central Bank’s ability to maintain inflation under control.
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The Fed stated that it will uphold any court decision. The Central Bank did not give any indication that Lisa Cook status as a member of its board has changed, and it remains listed on its site as an active member of several internal committees.
Concerns about Fed’s independence regarding the White House in defining monetary policy can have a ripple effect throughout the global economy. The dollar fell from other important currencies after Trump said he would fire Cook.
Cook sued Trump and the Fed on Thursday, saying that the unfounded allegation of the Republican president that she was involved in mortgage fraud before taking office does not give her legal authority to remove her and was a pretext for dismissing her for refusing to reduce the interest rate.
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“The cause for the president means that she will not agree with the fall in the interest rate,” said Cook’s lawyer, the prominent Washington lawyer Abbe Lowell during the hearing.
Cook denied having committed mortgage fraud, calling the allegations “unfounded and not proven,” but did not explain the basis for this position.
The law that created the Fed says that the directors can only be deprived of “by just cause”, but does not define the term or establish procedures for dismissal. No president has ever dismissed a Fed Director, and the law was never put to the trial in a court.
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Trump claims that a year earlier, Cook described separate properties in Michigan and Georgia as main homes in mortgage requests, which could have allowed her to obtain lower interest rates.
Cook said that even if he had committed, this would not be a reason to remove because the alleged conduct occurred before it was confirmed by the US Senate and assumed the position in 2022.
Trump government lawyers argued on Friday’s hearing that the alleged mortgage fraud is enough reason to remove a Fed director, regardless of when this happened.
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Trump and William Pulte, the director of the federal real estate financing agency that raised the first questions about Cook’s mortgages this month, said the alleged conduct questions her integrity.
The government also argued that giving Fed directors protections against removal violates the president’s broad constitutional powers to control the executive branch, as he did in lawsuits filed by other former employees that Trump dismissed.
Cook argued that federal laws that limit the president’s ability to dismiss officials from other bodies define the cause as neglect, misconduct or inefficiency that occurs when an employee is in office, and the same standard should be applied to the Fed.
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The conservative majority of the US Supreme Court provisionally allowed Trump to define employees of other organs. In a May decision, he distinguished the Fed of these agencies, citing their unique structure and “distinct historical tradition”.
Cook’s departure would allow Trump to appoint his fourth choice for the seven Fed members board.
