Court halts Trump's intervention, Federal Reserve civil war breaks out! Gold safe-haven buying "can't stop"
2025-09-16 11:02:41
A federal appeals court on Monday evening (September 15th) rejected the Trump administration's emergency motion to remove Governor Tim Cook before this week's Federal Reserve interest rate meeting. A divided three-judge panel in Washington, D.C., upheld a lower court's temporary injunction, allowing Cook to continue serving while a lawsuit challenges the legality of his removal, but with limited time remaining before the Federal Reserve's September 16th meeting.
The Trump administration announced last month that it would remove Cook, accusing him of submitting false home loan applications before taking office. The accusation was made by Bill Pulte, the Trump-appointed director of the Federal Housing Finance Agency (FHFA), and has been handed over to the Department of Justice for a criminal investigation.
Cook has not been charged with a crime, and his lawyers have strongly denied the fraud allegations in court documents, saying that complete property records "simply refute the government's claims" and suggesting that his removal was due to his interest rate policy stance that differs from Trump's.
Cook filed a lawsuit shortly after Trump's announcement, setting off a high-stakes legal battle over the president's control over the Federal Reserve. Cook argued that Trump violated the Federal Reserve Act by failing to establish a valid basis for removing her. The statute states that the president can remove a member of the Federal Reserve Board only for probable cause (which meets legal standards).
The Trump administration has argued that the president has broad discretion in deciding what constitutes good cause to remove a Fed official.
Cook's lawyers said the allegations, which were unproven and unrelated to job performance, did not meet that standard, and they suggested that Trump targeted her because she disagreed with him on the wisdom of lowering interest rates.
Her lawyers also said that suspending the court's order would threaten her ability to attend upcoming Fed meetings and jeopardize her seat on the board of governors in the long term, noting that Trump has said he would move quickly to replace her.
They added that any sign that the Fed’s independence was under threat could unsettle markets , especially after months of public pressure from Trump on Fed Chairman Jerome Powell to cut interest rates. “What is needed now is an orderly process and calm deliberation, not a destabilizing rush to judgment.”
District Judge Jia Cobb ruled last week that Cook was "substantially likely to prevail" on her case and temporarily blocked her removal.
“If a former president and the former Senate confirmed Bernie Madoff or Charles Ponzi as Federal Reserve governors, it would be a disregard of reality to suggest that a subsequent president could not remove them for misconduct, whether or not such conduct occurred while in office,” the Justice Department said in its brief to the appeals court.
The Court of Appeal upheld the original ruling by a 2-1 vote. Judges Garcia and Childs, appointed by Biden, pointed out that Cook was not given a proper opportunity to defend himself and that allowing the government action would "upend the status quo."
Trump-appointed Judge Katsas dissented, arguing that the president should have the power to ensure that trustworthy individuals hold key positions, and cautioning against lengthy hearings that could allow unqualified individuals to participate in major decisions (such as interest rate votes). While the Supreme Court previously upheld the president's removal of members of independent agencies, it suggested that the Federal Reserve may enjoy additional protections due to its "quasi-private entity" status.
A federal appeals court rejected the Trump administration's emergency request to remove Federal Reserve Governor Tim Cook, upholding his continued service pending the completion of legal proceedings. This ruling temporarily blocks direct executive intervention in the Federal Reserve and alleviates market concerns about the erosion of the Fed's independence. In the short term, judicial checks and balances will help maintain stable market expectations and reduce risk aversion, potentially putting some downward pressure on gold prices .
Although the court has temporarily blocked the removal process, the Trump administration's attempt to accuse Cook of loan fraud and link it to interest rate stances has exposed executive power's intention to interfere with monetary policy. Cook's lawyers have issued a clear warning: "Any sign of a threat to the Fed's independence could disrupt markets." If concerns about political interference in the Fed continue to fester, they could raise doubts about the institution's credibility and the long-term value of the dollar, boosting gold's safe-haven appeal .
Cook is considered a dovish member of the Federal Reserve, and the controversy surrounding his removal is directly related to Trump's long-standing pressure for a rate cut. While the market generally expects a rate cut at this meeting, board member turmoil and legal conflicts could affect consensus and increase uncertainty about the path of interest rates. History shows that internal disputes within monetary policymaking circles often drive higher market volatility. Gold, as a non-interest-bearing asset, could attract safe-haven inflows amidst this turmoil, potentially exacerbating price volatility .
Meanwhile, the Senate urgently approved Trump's nominee, Stephen Milan, to join the Federal Reserve Board on Monday night, and he will attend this week's meeting. The combination of legal deadlock and personnel changes has injected potential support for gold prices .
(Spot gold daily chart, source: Yihuitong)
At 11:01 Beijing time, spot gold was trading at $3,678.17 per ounce.
Legal battle focuses on Fed independence
The Trump administration announced last month that it would remove Cook, accusing him of submitting false home loan applications before taking office. The accusation was made by Bill Pulte, the Trump-appointed director of the Federal Housing Finance Agency (FHFA), and has been handed over to the Department of Justice for a criminal investigation.
Cook has not been charged with a crime, and his lawyers have strongly denied the fraud allegations in court documents, saying that complete property records "simply refute the government's claims" and suggesting that his removal was due to his interest rate policy stance that differs from Trump's.
Cook filed a lawsuit shortly after Trump's announcement, setting off a high-stakes legal battle over the president's control over the Federal Reserve. Cook argued that Trump violated the Federal Reserve Act by failing to establish a valid basis for removing her. The statute states that the president can remove a member of the Federal Reserve Board only for probable cause (which meets legal standards).
The Trump administration has argued that the president has broad discretion in deciding what constitutes good cause to remove a Fed official.
Cook's lawyers said the allegations, which were unproven and unrelated to job performance, did not meet that standard, and they suggested that Trump targeted her because she disagreed with him on the wisdom of lowering interest rates.
Her lawyers also said that suspending the court's order would threaten her ability to attend upcoming Fed meetings and jeopardize her seat on the board of governors in the long term, noting that Trump has said he would move quickly to replace her.
They added that any sign that the Fed’s independence was under threat could unsettle markets , especially after months of public pressure from Trump on Fed Chairman Jerome Powell to cut interest rates. “What is needed now is an orderly process and calm deliberation, not a destabilizing rush to judgment.”
District Judge Jia Cobb ruled last week that Cook was "substantially likely to prevail" on her case and temporarily blocked her removal.
Divergence of opinion among the courts and subsequent developments
“If a former president and the former Senate confirmed Bernie Madoff or Charles Ponzi as Federal Reserve governors, it would be a disregard of reality to suggest that a subsequent president could not remove them for misconduct, whether or not such conduct occurred while in office,” the Justice Department said in its brief to the appeals court.
The Court of Appeal upheld the original ruling by a 2-1 vote. Judges Garcia and Childs, appointed by Biden, pointed out that Cook was not given a proper opportunity to defend himself and that allowing the government action would "upend the status quo."
Trump-appointed Judge Katsas dissented, arguing that the president should have the power to ensure that trustworthy individuals hold key positions, and cautioning against lengthy hearings that could allow unqualified individuals to participate in major decisions (such as interest rate votes). While the Supreme Court previously upheld the president's removal of members of independent agencies, it suggested that the Federal Reserve may enjoy additional protections due to its "quasi-private entity" status.
Analysis of the impact on gold prices
A federal appeals court rejected the Trump administration's emergency request to remove Federal Reserve Governor Tim Cook, upholding his continued service pending the completion of legal proceedings. This ruling temporarily blocks direct executive intervention in the Federal Reserve and alleviates market concerns about the erosion of the Fed's independence. In the short term, judicial checks and balances will help maintain stable market expectations and reduce risk aversion, potentially putting some downward pressure on gold prices .
Although the court has temporarily blocked the removal process, the Trump administration's attempt to accuse Cook of loan fraud and link it to interest rate stances has exposed executive power's intention to interfere with monetary policy. Cook's lawyers have issued a clear warning: "Any sign of a threat to the Fed's independence could disrupt markets." If concerns about political interference in the Fed continue to fester, they could raise doubts about the institution's credibility and the long-term value of the dollar, boosting gold's safe-haven appeal .
Cook is considered a dovish member of the Federal Reserve, and the controversy surrounding his removal is directly related to Trump's long-standing pressure for a rate cut. While the market generally expects a rate cut at this meeting, board member turmoil and legal conflicts could affect consensus and increase uncertainty about the path of interest rates. History shows that internal disputes within monetary policymaking circles often drive higher market volatility. Gold, as a non-interest-bearing asset, could attract safe-haven inflows amidst this turmoil, potentially exacerbating price volatility .
Meanwhile, the Senate urgently approved Trump's nominee, Stephen Milan, to join the Federal Reserve Board on Monday night, and he will attend this week's meeting. The combination of legal deadlock and personnel changes has injected potential support for gold prices .
(Spot gold daily chart, source: Yihuitong)
At 11:01 Beijing time, spot gold was trading at $3,678.17 per ounce.
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