Federal Reserve President Jerome Powell plans to appear this Wednesday (21) at oral arguments at the United States Supreme Court in a case that questions President Donald Trump’s power to fire Fed Board Director Lisa Cook. The information was revealed by a source heard by CNBC.
The presence of the head of the central bank at such a session is considered unusual and reinforces the perception that the trial is seen within the institution as a critical test of its independence.
Powell’s trip to the Supreme Court comes at a time when he himself is the target of a criminal investigation by the Department of Justice in Washington, related to a billion-dollar renovation project at the Federal Reserve headquarters and testimony given to Congress about this work.
Still, the focus of the court case is Trump’s attempt to remove Cook from his Fed tenure, which, by law, can only be terminated “for cause.”
In August last year, Trump announced that he was firing Lisa Cook, citing allegations of alleged mortgage fraud linked to two properties she owned.
The director denies any wrongdoing and has not been formally accused of a crime. In response, she filed suit in Federal Court in Washington to block the dismissal.
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In September, a district judge barred the government from removing her while the case proceeds, and an appeals court upheld the ruling.
The Department of Justice, in statements presented to the Supreme Court, classified the lower court decisions as “yet another case of undue interference by the Judiciary in the president’s removal authority” — in this case, regarding members of the Fed’s Board of Governors.
In practice, the government argues that the president’s margin of discretion to define what is “just cause” should be broad.
If the Supreme Court limits the scope of the “just cause” clause or endorses a more flexible interpretation in favor of the White House, the precedent could open space for presidents to try to shape the composition of the Fed according to short-term interests, including the conduct of monetary policy.
