


A federal judge heard arguments about whether Federal Reserve governor Lisa Cook can remain on the Fed board as her lawsuit to block President Donald Trump from firing her progresses.
The Friday hearing in federal court, which went for over two hours, did not end with a ruling either way. But U.S. District Judge Jia Cobb will continue to consider Cook’s request for a temporary order barring Trump from firing her over allegations of mortgage fraud. A ruling is not expected until after Labor Day.
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During the hearing, Cook’s lawyer, Abbe Lowell, argued that Trump did not have cause to fire the Fed governor. He also told the judge that Cook’s due process rights were violated, noting that Federal Housing Finance Agency Director Bill Pulte’s social media accusations of mortgage fraud were immediately followed by Trump’s calls for her resignation.
“You can’t have Director Pulte’s crazy midnight tweets be the cause,” Lowell said.
Justice Department attorney Yaakov Roth argued that Supreme Court rulings have supported the president’s authority to fire government officials and said Cook has not yet responded to the allegations themselves.
Given the nature of the firing and Cook’s position at the Fed, there is a chance that the case makes its way to the Supreme Court. The case has major implications for the Fed’s independence, which, over the years, has insulated it from the executive branch.
Lowell argued that Trump’s attempt to show cause subverts the Federal Reserve Act. The lawsuit said that an “unsubstantiated allegation about private mortgage applications” does not meet that burden.
“This case challenges President Trump’s unprecedented and illegal attempt to remove Governor Cook from her position which, if allowed to occur, would the first of its kind in the Board’s history,” the lawsuit reads.
While the Supreme Court ruled earlier this year that the president generally has the power to remove independent agency members, the conservative majority stipulated in that case that Federal Reserve board members can only be fired for cause.
The push to oust Cook began after Pulte, who oversees the government-sponsored enterprises Fannie Mae and Freddie Mac, sent a criminal referral to Attorney General Pam Bondi, claiming that Cook listed two homes, one in Michigan and one in Georgia, concurrently as her primary residence months before she was nominated to the Fed board.
In the letter to Bondi, Pulte said it appears Cook “falsified bank documents and property records to acquire more favorable loan terms, potentially committing mortgage fraud under the criminal statute.”
“This has included falsifying residence statuses for an Ann Arbor, Michigan-based residence and an Atlanta, Georgia-based property in order to potentially secure lower interest rates and more favorable loan terms,” Pulte wrote.
PULTE FILES SECOND MORTGAGE COMPLAINT AGAINST LISA COOK FOR PROPERTY IN MASSACHUSETTS
In addition to saying that Trump lacks cause, Cook is arguing that Trump’s actions violate her Fifth Amendment due process rights and her statutory right to a notice and hearing as part of the Federal Reserve Act.
Pulte sent Bondi a second criminal referral this week over allegations about Cook. The new referral is related to a third mortgage at a property in Massachusetts.