Trump makes new push for court approval to fire US Fed’s Lisa Cook

WASHINGTON – President Donald Trump on Sept 14 made a final push to sway a US appeals court to let him oust Federal Reserve Governor Lisa Cook over allegations of mortgage fraud before this week’s Fed vote on interest rates, again telling the court that she has failed to dispute the claims.

Mr Trump last week asked the Washington-based appeals court to temporarily pause a lower court’s Sept 9

injunction blocking him from firing Ms Cook

while her lawsuit challenging her dismissal proceeds. A ruling from the three-judge appellate panel could come as soon as late on Sept 14 or Sept 15.

If the appeals court denies the Justice Department’s request for a so-called stay order, Mr Trump is likely to immediately ask the Supreme Court to intervene, setting up a series of last-ditch arguments with the justices by both sides before a highly anticipated Fed policy meeting on Sept 16 to 17.

Mr Trump moved to fire Ms Cook in August after Federal Housing Finance Agency director Bill Pulte, one of the President’s most outspoken supporters, accused her of committing mortgage fraud.

He alleged that she declared two homes in Georgia and Michigan as her primary residence in order to get better loan terms. The real estate transactions predated her time at the Fed.

Ms Cook “has provided no explanation for the contradictory representations apparent on the face of her mortgage agreements, and that alone is grounds to stay the extraordinary” preliminary injunction, the Justice Department said in a filing on the afternoon of Sept 14.

Yet Mr Trump’s new filing came just days after revelations that Ms Cook described the disputed Georgia property as a “vacation home”, according to documents viewed by Bloomberg News.

The May 2021 loan estimate was issued by a credit union weeks before she purchased the home. The document shows that she told the lender that the property would not be her primary residence.

The Justice Department’s filing did not address those revelations.

Ms Cook’s lawyer Abbe Lowell made his final arguments against Mr Trump’s stay request in a filing on Sept 13, repeatedly contending that the Fed’s independence would be shattered if the court allowed the economist to be fired over unproven allegations with questionable motives.

“A stay by this court would therefore be the first signal from the courts that our system of government is no longer able to guarantee the independence of the Federal Reserve,” Mr Lowell said.

“Nothing would then stop the President from firing other members of the board on similarly flimsy pretexts. The era of Fed independence would be over.”

Mr Lowell portrayed the court battle as a slippery slope with “dire” consequences for the US economy, echoing arguments that Ms Cook made in the lawsuit she filed in August.

“Central banks like the Federal Reserve are independent for a reason: Even the perception of political influence can destroy the investor confidence that is essential for economic growth and stability,” Ms Cook’s lawyer said in the Sept 13 filing. “And that bell cannot be unrung.”

Mr Trump is seeking to overturn a decision by US District Judge Jia Cobb, who ruled that he likely did not have “cause” under the Federal Reserve Act to fire Ms Cook.

Ms Cobb also held that Mr Trump likely violated Ms 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.

In Mr Trump’s Sept 14 filing, he argued that Ms Cobb’s decision went too far by saying he did not have cause to fire Ms Cook because the alleged misconduct occurred a year before she took office in 2022.

The Justice Department called the judge’s findings “backwards” and said she was “reading in limitations that Congress knew how to impose but did not”.

The Fed has not 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 Mr Cobb’s decision on hold while the appeal proceeds, allowing Ms 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. BLOOMBERG