Trump Asks Supreme Court to Let Him Fire Fed’s Lisa Cook (3)

President Donald Trump has asked the US Supreme Court to let him fire Federal Reserve Governor Lisa Cook while she fights his attempt to oust her, pulling the justices into a high-profile legal battle with major implications for the US central bank’s independence.

The Justice Department asked the court on Thursday to at least temporarily pause a Washington federal judge’s ruling that has allowed Cook to remain in her position for now. The emergency request came after the Fed held its most recent meeting earlier this week, which Cook participated in.

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. Cook has denied committing mortgage fraud and has remained on the job.

US Solicitor General D. John Sauer, the Trump administration’s top Supreme Court lawyer, wrote in Thursday’s application that the lower court’s ruling represented “yet another case of improper judicial interference with the President’s removal authority.”

Lisa Cook

Photographer: Al Drago/Bloomberg

Even though the Supreme Court previously identified the Fed as “uniquely structured” in the context of fights over Trump’s efforts to fire members of other independent agencies, Sauer wrote that courts had no role to play in reviewing a president’s rationale for firing a governor “for cause,” which is the standard under US law.

A spokesperson for Cook’s lawyers did not immediately return a request for comment on Thursday.

Read More: Bessent, Like Fed Governor, Made Contradictory Mortgage Pledges

The Justice Department’s latest move comes after a federal appeals court voted 2-1 ahead of the Fed meeting to leave Cook in place for now. The appeals court’s order didn’t address the underlying claims of mortgage fraud against Cook, and also did not reference reports over the weekend that loan documents for Cook’s Georgia home appear to contradict Pulte’s claim, showing that she told the lender the property was a vacation home.

Fed Vote

With Cook in attendance and voting with the majority, the Fed’s policy committee on Wednesday lowered interest rates by a quarter percentage point in an effort to support a weakening labor market. Analysts had expected as many as four dissents, but in the end only Stephen Miran, a Trump ally who was sworn in Tuesday morning, voted against the move. He preferred a half-point cut.

The Supreme Court’s conservative majority has largely sided with Trump this year in allowing him to fire federal officials, but the dispute over Cook’s position at the Fed is an untested arena that carries potentially monumental consequences for the US economy.

Sauer wrote in the government’s application to the justices that Cook’s case should fail at several steps. Her service as a Fed governor wasn’t a “property interest” that gave her grounds to sue, he said. In addition, social media posts by Trump and another US official announcing the accusations against Cook qualified as “due process” and the allegation itself was “cause” to fire her under US law.

The lower court’s decision “would invite judicial micromanagement,” Sauer argued.

US District Judge Jia Cobb sided with Cook and let her continue working on Sept. 9 while she sued to keep her job. The judge found that Cook, appointed by former President Joe Biden, was likely to win her claim and that Trump didn’t satisfy the requirement that her removal be “for cause” with unproven allegations of mortgage fraud before her time in office.

‘For Cause’

Cobb, also a Biden-era nominee, wrote that when Congress adopted the “for cause” language in the Federal Reserve Act, they intended for it to relate to a governor’s behavior in office and “whether they have been faithfully and effectively executing their statutory duties.”

Laws that do describe “for cause” generally define the term as encompassing three possibilities: inefficiency; neglect of duty; and malfeasance, meaning wrongdoing, in office.

Cook has alleged that Trump’s move to oust her is part of a politically motivated pattern. The Justice Department has agreed during the legal proceedings that policy differences alone do not qualify as cause under the law. Trump has repeatedly and publicly expressed his frustration with the board’s pace in reducing interest rates and lambasted Fed Chair Jerome Powell.

Cobb also held that Trump likely violated Cook’s constitutional right to due process by attempting to fire her via a social media post that did not give her a meaningful opportunity to challenge the allegations.

The Justice Department swiftly appealed Cobb’s decision to the US Court of Appeals for the DC Circuit and asked that court to let Trump remove Cook ahead of the Fed meeting that took place on Sept. 16-17. The three-judge panel released its decision rebuffing the administration’s request on Sept. 15. Government lawyers didn’t immediately ask the justices to step in before the meeting began, but a White House official said at the time that the administration still intended to take the fight to the Supreme Court.

The majority of the appeals court in Washington indicated it was basing its decision on the due process question, finding that Cook was likely to win at least on that issue. The judges didn’t address the merits of her arguments for why Trump didn’t have “cause” to fire her.

The case is Trump v. Cook, 25A312, US Supreme Court.

(Updates with more from application.)

--With assistance from Christopher Condon.

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

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

Sara Forden

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