Federal Reserve Governor Lisa Cook can be removed “for cause,” her attorneys said Tuesday. But it’s up to Congress and the courts — not the Trump administration — to define what exactly constitutes “cause,” and decide whether that standard has been met, they said.
The Trump administration claims it has the right to remove Cook from her position at the central bank — and that it did so on Aug. 25, over allegations that she claimed two separate properties in Michigan and Georgia as her primary residence.
But attorneys for Cook maintain that “she did not ever commit mortgage fraud” and was never properly notified of those allegations or given an opportunity to defend herself.
They’re seeking a temporary restraining order and court declaration that President Trump’s publication of a letter on Truth Social notifying her that she was fired carries no legal weight, and that she is still a member of the Fed’s board of governors.
In passing the Banking Act of 1935, Congress intended to protect the independence of the central bank from political interference, Cook’s legal team maintained in a Sept. 2 court filing.
Notifying Cook she had been fired over social media deprived her of right to notice and a hearing, Cook’s attorneys said. The Trump administration’s claim that she is guilty of “deceitful and potentially criminal conduct” does not amount to “cause” — which the Supreme Court has in the past defined as inefficiency, neglect of duty, or malfeasance, they said.
“The government’s argument that the president’s decision to remove a board governor for cause is either unreviewable or entitled to significant deference cannot be squared with the Supreme Court’s reasoning” in an April ruling affirming for-cause removal protections for Fed policymakers are constitutional, Cook’s attorneys said.
“In the absence of meaningful judicial review to constrain a president from firing governors for whatever ’cause’ he invents, the Federal Reserve is not actually an independent body,” they argued.
Those concerns are shared by 593 economists who signed a letter saying the Trump administration’s move to fire Cook “threatens the fundamental principle of central bank independence and undermines trust in one of America’s most important institutions.”
Any allegations against Cook “should be adjudicated through established legal channels, with transparency and fairness, to preserve trust in America’s economic stewardship,” the letter said.
Federal Reserve policymakers should never be removed without “a clear, documented ‘for cause’ basis that would withstand judicial scrutiny,” the economists said. “Weakening that standard increases monetary policy uncertainty and forces markets to price political risk into interest rates, raising those rates and costs for families and businesses.”
Attorneys for Cook filed a complaint against the Trump administration and a motion for a temporary restraining order on Aug. 28.
Trump administration attorneys argued in an Aug. 29 motion that the president has “broad discretion” to remove Cook for cause, and that she hasn’t offered any defense to the allegations against her.
The president “gave notice that he viewed the mortgage representations as grounds to fire Dr. Cook, and then waited five days for her to respond before proceeding with the threatened termination,” administration lawyers maintain.
After a hearing Friday, U.S. District Judge Jia Cobb had given Cook’s attorneys a Sept. 2 deadline to bolster their case, which they have now done. Attorneys for the government have until Sept. 4 to file a supplemental brief addressing the additional points raised by Cook’s attorneys.
Allegations by Pulte
The allegations against Cook were initially made by Federal Housing Finance Agency Director Bill Pulte in an Aug. 15 criminal referral to the Department of Justice.
Pulte announced a second criminal referral against Cook on Aug. 28, alleging Cook took out a mortgage on a Massachusetts condo that she represented as a second home but has used as an investment property.
Although deliberately misleading lenders about the occupancy status of a property to get a better interest rate would be a prosecutable offense, Cook has not been charged with a crime or disclosed details about her mortgages that might absolve her.
California Rep. Ro Khanna, a Democrat, told NBC’s “Meet the Press” on Sunday that Trump’s attempt to remove Cook from the Fed’s board threatens its independence, but said she should make documents associated with her mortgage public.
Cook and two Trump opponents Pulte has also accused of mortgage fraud — New York Attorney General Letitia James and Sen. Adam Schiff — deny wrongdoing, characterizing Pulte’s allegations as political retribution.
Appearing on Fox Business Tuesday, Pulte complained that Cook is “not coming out and denying it. Instead, she’s doing double speak with her attorneys and trying to play all kinds of games and attack us as the investigators.”
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