Cooking up a lawsuit, Litigation outlook and what it could mean for Fed policy

Wolfe Research analysts say the legal battle between Federal Reserve Governor Lisa Cook and President Donald Trump could shape the central bank’s immediate policy path and longer-term independence.

Cook filed suit Thursday to block Trump’s attempt to fire her, and Wolfe Research expects “Cook will get an injunction against the firing from the DC District Court,” keeping her in place to vote at the Fed’s September meeting.

The case has been assigned to Judge Jia Cobb, and analysts noted that “both the district and circuit courts in DC will be sympathetic to Cook’s lawsuit.”

Still, they cautioned that the road could be “bumpy,” pointing to the precedent of Wilcox v. Trump, where a defendant was “fired and un-fired multiple times.”

 A hearing on Cook’s request for a temporary restraining order is scheduled for today, August 29, with a ruling possible within days. Wolfe expects the case to reach the Supreme Court by year-end.

At the heart of the dispute is what counts as “cause” for dismissal under the Federal Reserve Act.

Cook’s legal team argues it must mean “inefficiency, neglect of duty, or malfeasance in office.”

But Wolfe Research doubts the conservative majority will adopt that standard, writing: “Our best guess is that they will ultimately be unwilling to restrain President Trump’s assertion of ‘cause’ in this case.”