Federal Reserve Governor Lisa Cook has filed a lawsuit against the Trump administration, claiming that the president’s decision to fire her was unfounded and without cause.
The lawsuit, lodged in federal court earlier this week, names President Donald Trump and Federal Reserve Chair Jerome Powell as defendants. It seeks an immediate injunction against Cook’s firing, as well as a court order reaffirming her position on the Federal Reserve’s Board of Governors.
The Trump administration, for its part, claims that it removed Cook over allegations that she committed mortgage fraud by claiming two homes as primary residencies, presumably to secure more favorable interest rates.
“The executive power of the United States is vested in me as President and, as President, I have a solemn duty to ensure that the laws of the United States are faithfully executed,” Trump wrote in his termination letter to Cook. “I have determined that faithfully executing the law requires your immediate removal from office.”
“The Federal Reserve has tremendous responsibility for setting interest rates and regulating reserve and member banks,” Trump wrote. “The American people must be able to have full confidence in the honesty of the members entrusted with setting policy and overseeing the Federal Reserve. In light of your deceitful and potentially criminal conduct in a financial matter, they cannot and I do not have such confidence in your integrity.”
Cook’s lawsuit only briefly addresses these allegations, acknowledging that a “clerical error” could have caused discrepancies in her loan applications. In either case, Cook alleges, an accusation of fraud does not meet the standard necessary to remove a Federal Reserve governor from office.
Cook further claims that the fraud allegations are politically motivated, with Trump hoping to stack the Board of Governors in his favor.
“It is clear from the circumstances surrounding Governor Cook’s purported removal from the Federal Reserve Board that the mortgage allegations against her are pretextual,” the lawsuit alleges. “This allegation about conduct that predates Governor Cook’s Senate confirmation has never been investigated, much less proven. This allegation is not grounds for removal under [federal law].”
Abbe Lowell, an attorney representing Cook, said that, even if the allegations are true, making a mistake in a mortgage application doesn’t provide sufficient cause for removal.
“Even if the President had been more careful in obscuring his real justification for targeting Governor Cook, the President’s concocted basis for removal — the unsubstantiated and unproven allegation that Governor Cook ‘potentially’ erred in filling out a mortgage form prior to her Senate confirmation — does not amount to ‘cause’ within the meaning of the FRA and is unsupported by caselaw,” Lowell wrote in the lawsuit.
If Trump is successful in removing Cook, he would likely be able to secure a sympathetic majority on the Board of Appointees.
Sources
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