Lisa Cook Sues Trump Over Move to Oust Her From Fed Board
Federal Reserve Governor Lisa Cook sued President Donald Trump over his attempt to fire her for alleged mortgage fraud, kicking off a historic fight over independence of the US central bank.
Trump’s claim that Cook may have lied on mortgage applications to get better loan terms on a pair of homes is not sufficient “cause” to fire her because the alleged conduct is unproven and took place before her Senate confirmation, Cook said in a lawsuit Thursday.
“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,” her lawyer, Abbe Lowell, wrote in the suit in Washington federal court.
The lawsuit is a major escalation of the growing clash between the White House and the Fed, which has resisted Trump’s demands to lower interest rates even as Trump has repeatedly attacked Jerome Powell. The Fed chair has also resisted the president’s demands to resign. In her suit, Cook suggested the attempts to remove both her and Powell are part of Trump’s effort to seize control of the Fed.
Cook’s filing follows through her vow earlier this week to fight to finish her term that expires in 2038. She asked a judge to immediately issue an order blocking Trump’s effort to remove her and barring the Fed from taking any actions to carry out the president’s demand.
Cook requested an emergency hearing on her motion for a temporary order barring Trump from firing her. The case was assigned to US District Judge Jia Cobb, who was appointed by former President Joe Biden.
“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,” according to the complaint.
White House spokespeople didn’t immediately respond to requests for comment. Representatives for Cook’s lawyers and the Fed declined to comment.
In the complaint, Cook says that a policy dispute doesn’t constitute “cause” for removal, nor does “a specious assertion that a one ‘potentially’ committed a crime — one which is unproven, uncharged, and unrelated to official conduct.”
Trump’s claims that there is a reason for removing Cook “does not magically make such a basis grounds for a ‘for cause’ removal,” according to the suit.
Rulings in the case in the coming days and weeks could add to investors’ concerns that the president’s efforts will undermine the independence of the central bank — a bedrock assumption of US markets that underpins the nation’s credit ratings.
Cook sued days after Trump wrote a letter to her, which he posted on social media, saying that he was removing her immediately in light of her “deceitful and potentially criminal conduct in a financial matter.”
Trump’s post followed a claim on social media by Federal Housing Finance Agency Director Bill Pulte that Cook lied on 2021 loan applications for two properties — in Michigan and Georgia — by claiming she would use each property as her primary residence to secure more favorable loan terms. He said the applications were filed two weeks apart.
The suit says the alleged mortgage fraud occurred before Cook’s Senate confirmation and that she wasn’t given an opportunity to respond to the allegations before Pulte referred the matter for a criminal investigation. Cook hasn’t been charged with wrongdoing.
Cook also seeks a declaration from the court that “unsubstantiated allegation of mortgage fraud prior to a Governor’s confirmation is not cause for removal under the Federal Reserve Act.”
Source : Bloomberg
