President Donald Trump has escalated the fight against Federal Reserve governor Lisa Cook, creating a commission to assess the mortgage fraud allegations that his allies have levied against her.
The committee will report to Trump “whether there is ‘cause’ for Governor Cook’s removal,” according to a memorandum dated Oct. 7. It will consider the evidence during a closed-door hearing at the White House scheduled for Nov. 5.
The White House did not immediately respond to a request for comment beyond the text of the memorandum.
Trump last year cited the mortgage allegations as grounds for Cook’s removal, the first presidential attempt to remove a sitting Fed governor in the institution’s history.
Cook sued in response, and the Supreme Court issued an emergency ruling in June blocking Trump from immediately removing Cook from the Federal Reserve without good cause, while the lawsuit over her attempted dismissal played out in the courts. Congress created the Fed to be independent of the president, so it could make decisions — such as raising interest rates — that may be politically unpopular.
Some of the justices were skeptical of the administration’s claims that Cook had committed mortgage fraud during arguments. However, the 5-4 decision written by Chief Justice John G. Roberts Jr. left open the possibility that Cook could still be removed if the president had a valid reason and gave Cook a chance to challenge her firing.
The Federal Reserve Act says a Fed governor can only be removed “for cause,” but the law does not provide a clear road map for how removal should work, Roberts noted.
An opening on the seven-member Fed board would create an opportunity to potentially tip the balance of Republican appointees, replacing a Biden administration governor whose term runs through 2038.
Following the decision, Trump said on social media that he would “take appropriate action immediately” to fire Cook.
In August, the White House alerted Cook that the president was “considering” her removal from the Federal Reserve Board of Governors and demanded a response within three weeks, ABC News reported.
The president has alleged that Cook claimed two homes as primary residences to get a better mortgage rate, characterizing her alleged behavior as “deceitful and potentially criminal conduct,” or, at a minimum, “gross negligence.” This followed a demand last year that Cook resign after Bill Pulte, the director of the Federal Housing Finance Agency, alleged that she falsified records and called for an investigation.
Cook “unequivocally” denied the allegations in filings with the Supreme Court.
The dispute involves a condominium in Atlanta that Cook bought in 2021. On at least one form, she listed the condo as her “primary” residence, which it was not. She has said that the reference was “inadvertent oversight” and that other paperwork connected to the purchase made clear that it was a vacation home.
Norm Eisen and Abbe Lowell, attorneys for Cook, wrote in a statement posted on social media that Cook had not committed mortgage fraud and would be found innocent. They said they were engaging with the White House.
“In light of the president’s repeated statements that he has already decided to fire Governor Cook — regardless of the facts and evidence — we have grave doubts that this ‘hearing’ is a legitimate one that would conform to the law,” the attorneys wrote.
Daniel A. Crane, a University of Michigan law professor and an expert on administrative law, said Trump does have a path to remove Cook but the process could be lengthy.
“The president can not remove Lisa Cook or any other governor of the Fed for political reasons, only for cause,” Crane said. “The court didn’t give it a very precise meaning but said, at a minimum, it requires some kind of serious wrongdoing that relates to her performance of her official functions.”
Crane said it is unclear whether the administration could prove mortgage fraud and, even if it could, whether it would rise to the standard articulated by the court for Cook’s removal.
In addition, Crane said the court made clear Cook is entitled to notice of the charges against her and a chance to respond. He said any action would be reviewable by the courts.
“That could take a really long time,” Crane said. “Is this all going to happen before 2028?”
Crane was referring to the end of Trump’s term, which could render moot the president’s efforts to fire Cook if they have not been resolved.
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