DC Circuit rejects Trump effort to sack Fed governor

WASHINGTON (CN) — A D.C. Circuit panel on Monday upheld a federal judge’s order blocking the Trump administration from terminating Federal Reserve Board of Governors member Lisa Cook before the nation’s central bank meets on Tuesday.

The three-judge panel ruled 2-1 to deny the requested emergency stay, which would have allowed the government to force Cook out on unsubstantiated claims of mortgage fraud.

U.S. Circuit Judge Bradley Garcia, joined by U.S. Circuit Judge Michelle Childs — both Joe Biden appointees — issued a concurring opinion expressing their support of U.S. District Judge Jia Cobb’s ruling that President Donald Trump’s effort to remove Cook violated her due process rights.

“In this court, the government does not dispute that it failed to provide Cook even minimal process — that is, notice of the allegation against her and a meaningful opportunity to respond — before she was purportedly removed,” Garcia wrote. “For that reason — and because of the myriad unique features of this case as compared to other recent challenges to presidential removals — I vote to deny the government’s emergency request for a stay pending appeal.”

Cobb issued a preliminary injunction last week barring Federal Reserve Chair Jerome Powell and Cook’s colleagues on the Board of Governors from taking any steps to remove Cook until the litigation concludes.

“President Trump’s actions and Cook’s resulting legal challenge raise many serious questions of first impression that the court believes will benefit from further briefing on a non-emergency timeline,” the Biden appointee wrote. “However, at this preliminary stage, the court finds that Cook has made a strong showing that her purported removal was done in violation of the Federal Reserve Act’s ‘for cause’ provision.”

The best reading of the provision, Cobb said, is that Trump’s claims of mortgage fraud in June and July 2021 would not amount to grounds for removal, as such instances would have occurred before the Senate confirmed her in January 2022. A member of the Board of Governors can only be removed based on their conduct in office and whether they have been “faithfully and effectively executing their statutory duties,” Cobb added.

Further, Trump’s attempted removal likely violated Cook’s Fifth Amendment due process rights and would irreparably harm Cook and the public interest, Cobb ruled.

The appeals panel declined to address the meaning of “for cause” in the statute, with Garcia writing there was no need to do so at present due to the emergency status of the case and the likelihood that Cook’s due process claim is meritorious.

U.S. Circuit Judge Gregory Katsas, a Trump appointee, issued a dissenting opinion on Monday and said that Cobb was wrong to rule that a federal officer could not be removed for pre-appointment conduct and that Cook has a constitutionally protected property interest in her office.

“In cases involving the president’s removal of principal officers, ‘the government faces greater risk of harm from an order allowing a removed officer to continue exercising the executive power than a wrongfully removed officer faces from being unable to perform her statutory duty,’” Katsas wrote, citing the Supreme Court’s decision in *Trump v. Wilcox. *

In that case, the high court stayed a pair of similar preliminary injunctions blocking the removal of National Labor Relations Board Member Gwynne Wilcox and Merit Systems Protection Board Chair Cathy Harris.

While indicative of how the high court may ultimately rule on the merits — Harris filed a petition for certiorari earlier on Monday seeking full review — the court ruled on an emergency basis on the so-called shadow docket, meaning it provided no explanation, and the decision does not set precedent.

Katsas asserted that Cook’s case is more deserving of an emergency stay considering her removal was “based not on the president’s policy preferences, but on serious accusations of misconduct that ‘call into question’ an officer’s ‘competence and trustworthiness,’” Katsas said.

In his concurrence, Garcia noted that Cook’s role was significantly different from those of Wilcox or Harris, largely because the government does not dispute that Federal Reserve Governors are protected from at-will removals.

Further, Garcia said the government’s argument that officials like Wilcox and Harris remaining in their offices significantly harmed the president by forcing him to work with a removed officer fails.

“But here, the government agrees that the president may not direct the Federal Reserve’s policy-making decisions, so to the extent he ‘works with’ members of the Board of Governors it is in a much different capacity than in the cases the government cites,” Garcia said.

He added that, considering Cook has been in office continuously since 2022, granting the president’s requested stay would upend the status quo and introduce the possibility of “the disruptive effect of the repeated removal and reinstatement” that the high court feared in prior cases.

The Justice Department has argued that the executive branch enjoys significant discretion over removing principal officers and that the federal courts generally cannot “second guess” such decisions. And even if the courts had such power, the government asserts, they could only review claims that a removal was well outside the president’s powers.

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