As the Justice Department continues its investigation into the Federal Reserve, the next front in the central bank’s quest to maintain political independence will shift to the Supreme Court.
On Jan. 21, the high court will hear arguments related to President Donald Trump’s efforts to fire Federal Reserve Governor Lisa Cook.
Administration officials last year accused Cook of committing mortgage fraud on properties she bought under federally subsidized housing programs. Trump tried to remove Cook from her position but thus far has been prevented by courts. Should the White House win the case, it could set an important precedent for the president’s ongoing attempt to oust Fed Chair Jerome Powell.
“If the Court rules against Cook, that would significantly raise the probability that Powell could also be removed based on the DoJ investigation,” Bank of America economist Aditya Bhave said in a note. “We have been arguing that the Cook case is more important for the policy trajectory than the identity of the next Fed Chair. We think that’s even more true now.”
The stakes were raised in the Fed saga when Powell announced Sunday that he’d been served with Justice Department subpoenas regarding a controversial multimillion-dollar renovation project at the central bank’s headquarters in Washington, D.C. The probe reportedly focuses on whether Powell lied about the project during congressional testimony last year.
