Ex-Fed, Treasury chiefs urge Supreme Court to block Trump's firing of Lisa Cook

A bipartisan coalition of former economic leaders, including notable figures like Ben Bernanke and Janet Yellen, is advocating for the independence of the Federal Reserve by submitting a brief to the Supreme Court against President Trump's attempt to remove Governor Lisa Cook.

The brief emphasizes that political interference in the Fed could undermine public confidence and disrupt economic stability, stressing the importance of maintaining the central bank's independence to ensure effective monetary policy.

Research supports that central bank independence correlates with better economic outcomes, such as lower inflation and favorable interest rates, reinforcing the coalition's argument against dismissal of Cook amid claims of misconduct, which she has denied.

The situation has heightened scrutiny on the Federal Reserve's credibility, as financial markets closely watch the implications of political pressures on the institution's ability to function effectively.

Recommendation Rating: Strong Advocacy for Central Bank Independence

A coalition of former economic leaders has taken a significant step by submitting a brief to the Supreme Court, urging the justices to prevent President Donald Trump from dismissing Federal Reserve Governor Lisa Cook. This bipartisan group emphasizes the importance of maintaining the Federal Reserve's independence.

The coalition includes distinguished figures such as former Fed Chairs Ben Bernanke, Alan Greenspan, and Janet Yellen, as well as ex-Treasury Secretaries Timothy Geithner, Henry Paulson, Robert Rubin, and Lawrence Summers—all of whom have served across both Republican and Democratic administrations.

This amici curiae brief is particularly timely as Cook's legal team faces a looming deadline at 1600 ET on Thursday. They must respond to the Justice Department's claims that Trump has the authority to remove Cook from her position on the seven-member Fed board while the Supreme Court deliberates on the legality of such an action.

The former policymakers articulated in the brief, "The independence of the Federal Reserve, within the limited authority granted by Congress, is a crucial element of our national monetary framework." They warned that permitting the government to dismiss a board member under legal scrutiny could undermine public confidence in the Fed's independence and jeopardize the long-term stability of the economy.

Research consistently underscores the benefits of central banks shielded from political interference, suggesting they yield superior economic outcomes. This is particularly evident in studies that assess central bank independence through variables such as long, staggered terms for governors and protections against dismissal. Findings indicate that nations with these attributes generally experience lower inflation and more favorable interest rates.

The group of policymakers highlighted the importance of this ongoing dispute, noting that financial markets, employers, and the public are closely monitoring the situation surrounding Cook's potential removal. Should the perception arise that the Fed is politically influenced, it could damage its credibility. Such a decline in trust may hinder the Fed's ability to effectively manage monetary policy, potentially leading to increased inflation rates.

In late August, President Trump attempted to dismiss Cook, accusing her of mortgage fraud tied to applications related to properties she owns. Cook has adamantly denied any allegations of misconduct.

The Federal Reserve has garnered heightened attention from Wall Street following an interest rate cut last week—the first in nearly nine months. On Thursday, stock markets experienced a dip. Notably, here are some exchange-traded funds that track the S&P 500 index (SP500): (NYSEARCA:SPY), (NYSEARCA:VOO), (NYSEARCA:IVV), (NYSEARCA:RSP), (NYSEARCA:SSO), (NYSEARCA:UPRO), (NYSEARCA:SH), (NYSEARCA:SDS), and (NYSEARCA:SPXU).

We understand that the intersection of politics and financial news is of great interest to our readers, and we encourage you to engage in the ongoing political discourse.

This article also features contributions from editor Kim Khan.