A Federal Reserve Governor, Lisa Cook, Sues Trump Over Attempted Dismissal

A member of the Federal Reserve’s board of governors, Lisa Cook, is suing President Trump as he is trying to dismiss her from her post. While the president may fire members of the Fed “for cause,” it is not clear at this moment if Mr. Trump has the power to fire Ms. Cook based on the allegations that have been levied against her. Mr. Trump said in a letter to Ms. Cook on Tuesday, which was later posted to the president’s Truth Social account, that “there is sufficient reason to believe you may have made false statements on one or more mortgage agreements.” The basis for the attempted firing is a criminal referral that was sent to the Department of Justice by the director of the Federal Housing Finance Agency, Bill Pulte, accusing Ms. Cook of improperly listing two homes as her “primary residence” on mortgage applications. On Thursday, Ms. Cook’s attorneys filed a lawsuit in the U.S. district court for the District of Columbia, arguing that the president cannot remove Ms. Cook from her post in this way. She was nominated to serve on the board of governors by President Biden in 2022, and was confirmed to the post on a party-line vote in the Senate. “The operational independence of the Federal Reserve is vital to its ability to make sound economic decisions, free from the political pressures of an election cycle,” Ms. Cook’s lawyers write in their lawsuit. They are suing Mr. Trump, the board of governors, and the Federal Reserve chairman, Jerome Powell, in an attempt to keep her job. The attorneys argue that Mr. Trump’s attempt to fire her is “illegal and unprecedented.” “Presidents, facing pressure to boost the economy, may favor lower interest rates and a more expansive policy to achieve a temporary economic lift,” Ms. Cook’s legal team says. “However, this approach often fuels long-term inflation. A politically insulated Board of Governors can make appropriate, albeit unpopular, decisions — such as raising interest rates to combat inflation — that are crucial for the nation’s long-term financial health.”Ms. Cook’s term on the board of governors is not due to end until 2038, meaning she has more than enough time to see this legal process play out — however long it may take — without facing the statutory end of her time on the board. Her lawyers cite a recent order from the Supreme Court holding that the president may dismiss some executive branch board members as he sees fit, though the court in that same ruling hinted that the Fed may be immune from such firings. “The Federal Reserve is a uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States,” the court held in Wilcox v. Trump, which was a case brought by two executive branch board members who were fired by the president. They had argued that, like members of the Fed, they were insulated from presidential dismissal. The court said that they were not. In their lawsuit, Ms. Cook’s attorneys cite the numerous instances of Mr. Trump expressing his frustration with members of the Fed, including Mr. Powell, whom the president believes should be slashing interest rates despite concerns about inflation as a result of Mr. Trump’s tariffs. Her attorneys also argue that Mr. Pulte — a GOP donor and the scion of a residential real estate dynasty — is using his position to allege mortgage fraud by the president’s enemies so that the Department of Justice may open criminal investigations. New York’s attorney general, Letitia James, and Senator Adam Schiff are among those who have faced such accusations. “Since his confirmation, Director Pulte, often through social media postings, has used his office to allege mortgage wrongdoing against public officials, now turning his sights on Governor Cook. Each of Director Pulte’s criminal referrals have notably been, at one time or another, political targets of President Trump’s ire prior to any mortgage fraud allegations,” Ms. Cook’s lawsuit states. “The claims made in Director Pulte’s referral letter are unsubstantiated allegations … about conduct that predates her Senate confirmation, and Governor Cook has never been given an opportunity to address them,” the lawyers write.They further argue that the attempted firing of Ms. Cook represents an existential threat to the Fed’s independence as a whole because, if the courts validate her dismissal, then any member of the Fed with whom the president disagrees may be dismissed on “chalked up allegations.” “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, in order to effectuate her prompt removal and vacate a seat for President Trump to fill and forward his agenda to undermine the independence of the Federal Reserve,” her lawyers argue.

A Federal Reserve Governor, Lisa Cook, Sues Trump Over Attempted Dismissal

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