A federal judge late Tuesday ruled against President Donald Trump’s unlawful attempt to fire Federal Reserve Board Governor Lisa Cook last month, determining that the president’s “for cause” argument was unconvincing as it was based on unsubstantiated accusations of wrongdoing and represented an executive overreach with worrying implications.
Trump claimed his attempted removal of Cook, whose legal team challenged it as politically motivated and an “unprecedented and illegal” violation of the Fed’s statutory independence, was for falsified mortgage applications for homes Cook purchased prior to her appointment to the board. However, Judge Jia M. Cobb of the US District Court for the District of Columbia found that the alleged infractions were neither substantiated and also took place prior to her taking the position.
“According to the government, the determination of cause is committed to the president’s discretion by statute, leaving no role for this court. The court disagrees,” Cobb said in her decision.
The accusations against Cook center on accusations brought by Bill Pulte, a prominent political supporter of Trump appointed by the president to lead the Federal Housing Finance Agency (FHFA), which operates the public lending arms of both Fannie and Freddie Mac. Critics of Pulte have accused him of weaponizing his access to private mortgage data by sifting through records of Trump’s perceived political enemies.
As economist Dean Baker wrote in a column last week, people would be wise to recognize Pulte’s outsized role in the accusations Trump made against Cook.
“While the validity of Pulte’s allegations will have to be determined by the courts, the real scandal is Pulte himself,” wrote Baker. “He is supposed to be running the agency that oversees the processing of tens of millions of mortgages by two huge quasi-public agencies. We are not supposed to be paying him to rifle through mortgage documents to find and disclose dirt that Trump can use against his political opponents.”
By ruling against Trump on Tuesday, Cobb sided with Cook’s request for a temporary injunction. This means she will remain in her post, with full voting rights as a governor of the Fed Board, as the case proceeds in the courts.
“Today’s ruling recognizes and reaffirms the importance of safeguarding the independence of the Federal Reserve from illegal political interference,” said Abbe Lowell, an attorney on Cook’s legal team. “Allowing the president to unlawfully remove Governor Cook on unsubstantiated and vague allegations would endanger the stability of our financial system and undermine the rule of law.”
For now, Lowell added, Cook will “will continue to carry out her sworn duties as a Senate-confirmed Board Governor.”
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