Lisa Cook fired back on Tuesday at the Trump administration’s claims that the president has vast powers to oust members of the Federal Reserve’s Board of Governors, as her lawyers pressed for a swift resolution of the lawsuit over her dismissal.
In a filing in U.S. District Court in Washington, Ms. Cook’s legal team again urged a federal judge to rule that President Trump’s attempt to fire her late last month was unlawful and that she should stay on in her role as the case is litigated. They also explicitly defended Ms. Cook against the administration’s accusations that she falsified documents related to her personal mortgages, saying she “did not ever commit mortgage fraud.”
The Trump administration has argued that the president was well within his right to remove Ms. Cook “for cause,” which is generally understood to mean professional neglect or wrongdoing.
The Justice Department has also made the case that the president has sweeping authority to define what is and is not considered sufficient cause, an authority that Ms. Cook’s lawyers warned would effectively invalidate what is seen as a crucial guardrail protecting the Fed’s independence from political meddling.
“Contrary to the government’s arguments, the term ‘cause’ provides meaningful protection against removal — and courts must ensure that standard is followed when it comes to the ‘uniquely structured, quasi-private entity’ that is the Federal Reserve,” Ms. Cook’s lawyers wrote in Tuesday’s filing.
They have also argued that the activities in question took place before Ms. Cook joined the Fed in 2022. Her lawyers described the allegations as “unsubstantiated, untested and unaddressed.” Ms. Cook was subject to an intense vetting process after the Biden administration tapped her to join the Fed, and she had to be confirmed by the Senate before assuming her post.
“Setting aside the fact that Governor Cook did not ever commit mortgage fraud, any such pre-office offense plainly would not have been ‘so infamous a nature as to render the offender unfit to execute any public franchise,’” her lawyers said.
They also sought to frame Mr. Trump’s attack on Ms. Cook as politically motivated and stemming from the president’s anger over the central bank’s unwillingness so far this year to comply with his demands for substantially lower interest rates. Mr. Trump has talked openly about his desire to add more loyalists to the Fed, a degree of support that could give him significant power to mold the institution to his liking.
Ms. Cook’s team also made the case that she did not have the opportunity to respond to any of the claims before being fired, in violation of her right to due process. The accusations of wrongdoing were first leveled on social media on Aug. 20 by Bill Pulte, the director of the Federal Housing Finance Agency, who called on Ms. Cook to resign. By Aug. 22, Mr. Trump said he would fire Ms. Cook if she did not step down. Three days after that, he sent a letter telling Ms. Cook that she had been dismissed.
The Justice Department will have a chance to respond with its own briefing by Thursday. Lawyers for Ms. Cook are looking to fast-track a decision, in light of the Fed’s meeting on Sept. 17, when it will vote on interest rates. Policymakers are widely expected to restart interest rate cuts that were put on hold in January.
The Fed has pledged to carry out any decision rendered by the court, and it took no position during oral arguments on Friday over Ms. Cook’s motion. Until a court rules otherwise, Ms. Cook is considered an active governor.
Also on Tuesday, nearly 600 economists expressed their support for Ms. Cook in a letter addressed to Mr. Trump, members of Congress and the American public, and warned of the fallout if the Fed’s independence was undermined.
“Good economic policy requires credible monetary institutions,” wrote the economists, who included Nobel laureates and former economists at the central bank. “Credible monetary institutions, in turn, require the independence of the Federal Reserve.”
Colby Smith covers the Federal Reserve and the U.S. economy for The Times.
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