Trump Bid to Ax Cook Before Fed Meets Hinges on Weekend Filings

An appeals court asked for written arguments over the weekend in President Donald Trump’s effort to fire Federal Reserve Governor Lisa Cook before the Fed’s upcoming vote on interest rates, suggesting a decision as soon as Sunday evening.

The Justice Department asked a three-judge panel in Washington on Thursday to grant a so-called stay order that would allow Trump’s firing of Cook to take effect while the case proceeds.

Late Thursday, the panel ordered Cook to respond to Trump’s request by Saturday at 5 p.m. The Justice Department was ordered to file any reply to Cook by Sunday at 3 p.m. The panel is comprised of one judge appointed by Trump and two by former President Joe Biden.

If the appeals court denies the Justice Department’s request, the president is likely to immediately ask the Supreme Court to intervene.

The Trump administration has asked for a ruling by Monday, one day before the Fed meeting starts. Cook, in a separate filing, asked to have until Sept. 18 to respond. The court’s weekend briefing suggests it believes that a decision is needed before then.

Cook’s lawyer Abbe Lowell said in his filing that any ruling that threatens her attendance at the Fed meeting would “potentially plunge” the Fed’s vote “into turmoil” and would have “the real potential of impacting domestic and foreign markets.” Saturday’s filing will likely expand on those arguments.

Cook sued Trump last month after the president moved to oust her over allegations of mortgage fraud. The lawsuit has emerged as a major flash-point in the growing clash between the White House and the Fed, which has resisted Trump’s demands to lower interest rates.

The president is seeking to overturn a decision by US District Judge Jia Cobb, who ruled he likely did not have “cause” under the Federal Reserve Act to fire Cook. Cobb also held Trump likely violated Cook’s constitutional right to due process by trying to fire her via a social media post that did not give her an opportunity to challenge the allegations.

The Fed hasn’t taken a side in the legal fight and has said it will respect the court’s decision.

The question for the appeals court is whether to issue a ruling that would put Cobb’s decision on hold while the appeal proceeds, allowing Cook’s dismissal to take effect. Such stays are typically granted if the judges believe an appeal will ultimately succeed on the merits and the party asking for it will face “irreparable harm” without immediate action.

Trump said last month he was firing Cook after Federal Housing Finance Agency Director Bill Pulte accused her of fraudulently listing homes in Michigan and Georgia as a “primary residence” when she obtained mortgages in 2021 to secure more favorable terms on loans. Pulte later added a claim involving a third mortgage in Massachusetts.

Cook has alleged that Trump’s move to remove her is part of a politically motivated pattern, and that allowing him to oust her could undermine the public’s faith in the Fed and do lasting damage to the US economy.

The Justice Department said in its Thursday filing that a stay is justified because Trump is likely to win the case. One reason, the government contends, is that there are no “materially disputed facts” because Cook has failed to rebut the evidence or offer a “contrary explanation” for it.

The government also disputed Cobb’s finding that Cook’s due process rights were violated, arguing that the Fed governor has not used her public comments or her court filings to meaningfully explain the mortgage documents at the center of the controversy.

“Cook does not allege that she sought to offer any evidence to the President or anyone else that would explain her actions, either after the President first called on her to resign, or even through this litigation,” the Justice Department said.

Cook’s filings have explicitly said that she has never committed mortgage fraud and suggested possible explanations including a “clerical error.”

--With assistance from Amara Omeokwe.

To contact the reporters on this story:
Erik Larson in New York at elarson4@bloomberg.net;
Zoe Tillman in Washington at ztillman2@bloomberg.net

To contact the editors responsible for this story:
Elizabeth Wasserman at ewasserman2@bloomberg.net

Anthony Aarons, Peter Blumberg

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