Federal Reserve board of governors member Lisa Cook pushed back against President Trump’s bid to remove her in court filings Tuesday, contending she can’t be fired for mortgage information that was available during her confirmation process.
“A proper hearing would demonstrate that the Government had prior knowledge of the alleged facial contradictions in Governor Cook’s documents well before the President invoked them as the basis for her purported removal,” Cook’s lawyer, Abbe Lowell, wrote in the filings, expanding on her opposition to her firing.
Trump announced Cook’s dismissal last month, citing allegations of mortgage fraud raised in a criminal referral from the Federal Housing Finance Agency (FHFA) as “cause” for her removal, a requirement for removing members of the governing board under the Federal Reserve Act.
The move threw the Fed’s long-standing independence from the White House’s political influence into question, prompting a lawsuit from Cook where the courts must consider the president’s new push for expanded executive power.
Lowell said Cook submitted questionnaires and provided reports to the Senate that would have revealed the “same purported ‘facial’ contradictions'” that Trump pointed to as “cause” to fire her.
Cook was confirmed by the Senate in May 2022. Her lawyer said her all the alleged contradictions were included in documents disclosed to the White House before she was appointed by the president and confirmed by the Senate.
Lowell also doubled down that Cook “did not ever commit mortgage fraud.”
“If such unfounded allegations were enough to justify removal for ’cause,’ then the President could fire a Board member over mere policy disagreements — including the timing and/or amount of an interest rate drop,” Lowell wrote. “But, as the Government concedes, that is not the law.”
The Justice Department argued in court papers last week that making contradictory statements in financial documents is “more than sufficient ground” for removing a senior financial officer — no matter whether a criminal burden of proof could be sustained.
The Aug. 15 criminal referral from FHFA Director Bill Pulte claims that, weeks apart in 2021, Cook wrote in mortgage documents for properties in Michigan and Georgia that each was her principal residence.
He said he filed a second criminal referral for Cook last week, alleging she represented a third property as her “second home,” despite referencing it in other government documents as an investment or rental property.
At a hearing Friday, DOJ lawyer Yaakov Roth questioned how that wouldn’t qualify as grounds for removal by the president.
“I just don’t see it,” Roth said.
Cook has asked the court to block Trump’s firing from going into effect and bar other Fed governors from helping effectuate it to preserve the status quo as the lawsuit progresses. The government asked the judge to rule before Sept. 9, so appellate relief could be sought before the Fed’s next meeting Sept. 16.