Fed Governor Lisa Cook Likely To Keep Her Job After Supreme Court Arguments: Report

Supreme Court Justice Brett Kavanaugh warned a Trump administration lawyer on Wednesday that if President Donald Trump can fire Federal Reserve Governor Lisa Cook without judicial review it “would weaken, if not shatter, the independence of the Federal Reserve”.

• Kavanaugh’s comment to Solicitor General D. John Sauer was part of the hearing in the Supreme Court on whether Cook should be allowed to remain in office.
• Donald Trump had first moved to fire Cook in August last year.
• Lisa Cook was apparently one of the Federal Reserve governors who backed Powell in maintaining the interest rates.

Supreme Court Justice Brett Kavanaugh on Wednesday reportedly said that the Federal Reserve’s independence could be shattered if Federal Reserve Governor Lisa Cook gets fired without a judicial review, in a move that boosts her chances to stay in her position at the central bank. 

According to a report from CNBC, Kavanaugh’s comment to Solicitor General D. John Sauer was one of many skeptical questions to Sauer by the court’s justices as they heard arguments on whether Cook should be allowed to remain in office as she challenges in lower courts Trump’s attempt to fire her for uncharged allegations that she committed mortgage fraud.

“Your position that there’s no judicial review, no process required, no remedy available, very low bar for cause — that the President alone determines — and that would weaken, if not shatter, the independence of the Federal Reserve,” Kavanaugh reportedly told Sauer.

Trump’s Efforts To Fire Cook

Donald Trump had first moved to fire Cook in August last year, citing allegations made by Federal Housing Finance Director Bill Plute that Cook made false statements in applying for a home mortgage.

In response, Cook sued Trump in an attempt to block her removal from the Fed. A federal District Court judge in Washington had ruled that she can continue to remain with the central bank pending the outcome of her lawsuit.

Cook’s Support For Powell

Lisa Cook was apparently one of the Federal Reserve governors who backed Powell in maintaining the interest rates.

Federal Reserve has been facing fears surrounding its independence not only from attempts to fire Lisa Cook, but recent disclosure by Fed Chairman Jerome Powell that he is subject of a criminal investigation by the U.S. Attorney’s Office in Washington D.C., in connection with his testimony he gave last year on multi-billion-dollar renovation of the central bank’s headquarters there. 

Powell has said that the real reason for him to be under probe is the Fed maintaining interest rates steady last year, which has been criticized heavily by Trump. 

How Did Markets React?

U.S. equities edged higher on Wednesday. At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was up 1%; the Invesco QQQ Trust ETF (QQQ) rise 0.3%; and the SPDR Dow Jones Industrial Average ETF Trust (DIA) was higher by 0.5%. Retail sentiment around the S&P 500 ETF on Stocktwits trended in the ‘bearish’ territory at the time of writing.