The showdown between Donald Trump and the American federal reserve crosses an unprecedented threshold. On September 9, federal justice suspended the dismissal of Lisa Cook, the governor of the Fed, decided by the American president. A rare decision, which underlines the major issue of this conflict: the independence of the central bank in the face of political pressures. As a strategic meeting on rates, this judicial judgment relaunches the debate on the limits of executive power in the conduct of monetary policy.
In short
- Donald Trump's attempt to dismiss Lisa Cook, the Governor of the Fed, was suspended by the American federal justice.
- Justice JIA COBB considered that no “valid reason” justified this revocation, as required by the law framing the federal reserve.
- Lisa Cook, appointed in 2022 by Joe Biden, would have been targeted for alleged facts prior to his taking up.
- This case marks a first in the 111 years of history of the Fed and relaunches the debate on the independence of the institution.
A dismissal interrupted by justice
On August 25, Donald Trump announced the immediate dismissal of Lisa Cook, governor of the federal reserve, without providing detailed public justification, while A Fed resisted him and had just maintained the rates. However, this September 9, American justice has suspended this decision, considering that it could be illegal.
Federal judge JIA COBB estimated that there was no valid reason to justify this revocation, as required, however, the law framing responsibilities within the Fed. She stressed that Lisa Cook was likely to argue that her dismissal breaks the regulations applicable to the members of the Council of Governors.
Here are the main facts to remember on this case:
- An unprecedented judicial decision: The judge blocked the dismissal of Cook pending examination on the substance of her appeal, one week before a decisive meeting of the Fed on interest rates.
- A clear legal provision: the Supreme Court recently recalled that Fed governors can only be revoked for valid reasons, such as a breach of their obligations or a professional fault.
- A historic first: according to COBB judge, this attempt at revocation constitutes a unique case in the 111 years of Fed history.
Cook says Trump has violated the law by acting without legal justification, based on alleged facts prior to his appointment.
The suspension of Lisa Cook's dismissal does not end the case, but marks a significant turning point. American justice has sent a clear signal to the need to respect the independence of the Central Bank in the face of possible political maneuvers.
The substance of the case will be examined later, but the provisional maintenance of the governor in his functions already sends a strong message to the executive.
An attempted interference on the background of an economic strategy
According to the accusations relayed by the Trump administration, Lisa Cook lied to obtain in 2021 real estate loans at preferential rate. However, as judge COBB pointed out, these alleged facts predate its entry into office and cannot constitute a legal reason for revocation.
In his decision, the magistrate writing that “The valid reason does not envisage the revocation of a person only for facts that occurred before entering into office”. This line of defense constitutes a central point of the appeal brought by the governor.
However beyond the legal elements, it is indeed the institutional and political dimension that dominates. Lisa Cook's lawyer Abbe David Lowell said the court decision “Recognizes and reaffirms the importance of preserving the independence of the federal reserve against any illegal political interference”.
He warned of the potential consequences of a revocation without legal basis, stressing that this “Would jeopardize the stability of our financial system and undermine the rule of law”. Donald Trump, for his part, did not comment on the decision, ostensibly ignoring a question of a journalist on this subject.
In this climate where the independence of central banks becomes a political issue, the role of decentralized assets like Bitcoin takes on a new dimension.
If Trump's attempt had led, it would have enabled it to appoint a more aligned figure in its economic positions like the appointment of Stephen Miran, at a time when he exerts increasing pressure on the Fed for a drop in rates. Maintaining Lisa Cook can thus be interpreted as a barrier raised against the politicization of the institution.
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