Federal Reserve Gov. Lisa Cook’s case against President Donald Trump is not accustomed to being the B plot of the central bank drama. But for 24 or 48 hours, in the run-up and aftermath of Fed nominee Stephen Miran’s hearing in front of the Senate Banking Committee last week, it arguably was.
Cook and the defendants in her attempted firing last month are eagerly awaiting a ruling from a district court judge ahead of the Federal Open Market Committee’s next interest rate-setting meeting Sept. 16.
On the same day Miran testified in an effort to secure an open seat on the Fed’s board of governors, Trump’s lawyers argued for the go-ahead to fill another one.
“There is no basis” in the Federal Reserve Act “for a district court to second-guess” the president’s determination that the mortgage fraud allegations against Cook met the threshold of cause to dismiss her, “let alone to order reinstatement,” Trump’s lawyers wrote Thursday in a supplemental memo.
“Dr. Cook has not made the strong showing necessary to secure the extraordinary preliminary injunctive relief that she seeks,” the lawyers wrote, taking issue with a comparison Cook’s side made – namely that “members of the [Fed] Board would function with independence akin to Supreme Court justices.”
“[Justices] are removable only through impeachment. Had Congress wanted the Governors to be equally protected, it would have said so. It did not,” Trump’s lawyers wrote.
They fought back, too, against Cook’s argument that her firing was a pretext to rid the board of officials who disagree with Trump’s push to lower the interest rate.
“The mere existence of policy disagreement does not mean the President removed Dr. Cook because of that policy disagreement,” Trump’s side said. “None of the President’s statements about Federal Reserve policy made any mention of removing Dr. Cook or anyone else. Indeed, the President has expressed disagreement with the policy choices of many members of the Board, but has removed only one: Dr. Cook, after the mortgage revelations.”
Further, the policy disagreements “cannot be used to immunize [Cook] from the consequences of her misconduct or removal for such a cause-based rationale,” Trump’s lawyers wrote.
Cook’s lawyers filed their own brief Thursday, noting a parallel between the Fed governor’s dismissal and pressure Trump brought to bear against Harvard University. Harvard challenged in court the freezing of more than $2 billion in research funding – and a judge last week found the freeze illegal, citing that the administration “used antisemitism as a smokescreen for a targeted, ideologically motivated assault” on the university.
“That same smokescreen — using concocted allegations of mortgage fraud to find a basis to remove a Governor over policy disagreements and now claim ‘cause’ — is evident in President Trump’s and other public officials’ statements in the record,” Cook’s lawyers wrote Thursday.
To Cook’s argument that Trump afforded her no opportunity to respond to the mortgage allegations before firing her, the president’s lawyers argued “no invitation was needed for a principal officer of the United States, who is told she will be fired based on apparent mortgage fraud, to defend herself to the President, and the Court should not place itself in the position of micromanaging the way the President communicates with the most senior level of federal officers.”
“Her response could have been issued in any way she preferred, public or private,” Trump’s lawyers wrote. “The reality is that Dr. Cook quite intentionally said nothing — and is quite intentionally still saying nothing, two weeks and dozens of pages of briefing later. … An opportunity to tell one’s side of the story only matters if one has a side of the story to tell, and Dr. Cook has given no indication that she does.”
Amid the Cook and Miran threads playing out in Washington, several news outlets reported Thursday that the Justice Department opened a criminal investigation into whether Cook misrepresented information on mortgage applications for properties in Michigan and Georgia, and issued subpoenas on the matter.
“The administration is scrambling to invent new justifications for its over-reach,” Abbe Lowell, a lawyer for Cook said Thursday in a statement seen by the Financial Times, Bloomberg and The Wall Street Journal. “The questions over how Governor Cook described her properties from time to time, which we have started to address in the pending case and will continue to do so, are not fraud, but it takes nothing for this DOJ to undertake a new politicized investigation, and they appear to have just done it again.”
A Justice Department spokesman declined to comment.