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Supreme Court Weighs Limits of Trump’s Authority to Remove Federal Reserve Officials

As President Donald Trump escalates his efforts to exert greater control over the Federal Reserve, the U.S. Supreme Court on Wednesday is set to consider a case that could define the limits of a president’s power to remove a sitting Fed governor.

The dispute centers on Fed Governor Lisa Cook, a Democratic appointee whom Trump attempted to dismiss in August. The president said he sought her removal after administration officials raised allegations of mortgage fraud related to a loan application filed before she joined the Federal Reserve Board. Cook has denied any wrongdoing and has not been charged with a crime.

At issue before the Court is the meaning of “cause” for removal under the Federal Reserve Act, which does not explicitly define the term, and whether a president must provide formal notice and an opportunity for a hearing before dismissing a Fed official.

“The Court has to determine what constitutes a firable offense for members of the Federal Reserve Board,” said Lev Menand, a Columbia Law School scholar and former Treasury Department official. “It cannot simply be whatever the president decides.”

Trump has argued there is “sufficient evidence” that Cook misrepresented a mortgage application for a second home as a primary residence to obtain more favorable loan terms, which he claims creates at minimum an appearance of impropriety. The Justice Department has since opened a criminal investigation into the matter.

The ruling could have significant implications for the independence of the Federal Reserve and the balance of power between the White House and the central bank.

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