Lisa Cook won’t step down from the Federal Reserve without a fight. As expected, the Federal Reserve governor filed a lawsuit against Donald Trump today, attempting to block her removal from the board and challenging his authority to remove her. Cook’s filing called Trump’s attempt “unprecedented and illegal,” setting the stage for a fight that seems destined to go to the Supreme Court:
Federal Reserve Board Governor Lisa Cook on Thursday sued President Donald Trump, seeking to block his unprecedented move to fire her.
The suit, filed in federal court in Washington, D.C., also names Fed Chairman Jerome Powell and the board of governors itself as defendants.
“This case challenges President Trump’s unprecedented and illegal attempt to remove Governor Cook from her position which, if allowed to occur, would the first of its kind in the Board’s history,” Cook’s attorney, Abbe Lowell, wrote in the lawsuit.
There may be a reason for that, though. How many Fed governors have allegedly committed mortgage fraud? Trump fired Cook for claiming simultaneous primary-residence status in both Michigan and Georgia, which allowed Cook to get favorable loan terms in both places. Both CNBC and the New York Times note that neither Cook nor Lowell address this point in their lawsuit challenging Trump’s action to remove her, other than to call it immaterial:
In a 24-page filing, lawyers for Ms. Cook described the firing as “unprecedented and illegal,” and said it would “subvert” the central bank’s congressionally mandated protections as laid out in the Federal Reserve Act. The filing said Mr. Trump violated Ms. Cook’s right to due process, highlighting that she had no chance to respond to the allegations before the president announced her termination.
The lawsuit did not provide an explanation for why Ms. Cook listed two residences as her primary residence, which is the issue at the crux of Mr. Pulte’s campaign against her. Instead, it sought to paint the firing as purely political and not based on anything other than a desire to oust a governor who was not ready to fall in line with the president’s directives on interest rates.
“The unsubstantiated mortgage fraud allegations that allegedly occurred prior to Governor Cook’s Senate confirmation do not amount to ‘inefficiency, neglect of duty, or malfeasance in office,’” the lawsuit read, “nor has the President alleged that they do.”
Ahem. Did Cook reveal the potential mortgage fraud to the Senate before confirmation? Wouldn’t that have been material to a position on the entity that explicitly sets monetary and lending policy for the US banking system? Thus far, Cook has offered no explanation for claiming both houses as primary residences in the mortgages she received, which certainly raises suspicions that Cook gamed the system she now effectively supervises for all other borrowers and lenders in the US. That certainly seems to be a material concern about her fitness for office, and it’s telling that an explanation didn’t accompany this lawsuit or any of the public pushback to Trump’s termination notice, from either Cook or Lowell.
Even the NYT has noticed as much, as well as noticing that the Federal Reserve seems rather, well, reserved in its own response:
Ms. Cook retained her own counsel in the lawsuit, and she is not represented by the Federal Reserve. The central bank in recent days has sought to emphasize its independence while offering no comment about the legality of Mr. Trump’s actions or the allegations levied against one of its own members, even though the case could carry stark ramifications for others on the Fed board, potentially leaving them vulnerable to dismissal by Mr. Trump.
Perhaps they too wonder how fit Cook is to serve on a regulatory board after allegedly flouting regulations on transactions that come under their aegis.
The NYT offers an explainer of how all these cases of mortgage fraud keep popping up. Mortgage data is fairly public and relatively easy to access, as it turns out. And when the lawfare starts, it may not end when its innovators expect:
Politicians are using mortgage data against their enemies, so it’s time to figure out how much of it is available and what law-abiding citizens can do to shield it from prying eyes. …
Ms. Cook also wasn’t the first public figure to come in for this scrutiny. Other Trump adversaries, including Letitia James, the attorney general of New York, and Senator Adam Schiff, Democrat of California, are facing similar inquiries. The Texas attorney general, Ken Paxton, a Republican, has also had to answer for his housing records.
Double ahem. The NYT skips over the part where Letitia James used Trump’s commercial lending data to attempt to sue him into political and financial oblivion. No one lost a dime in those transactions either, and yet James and Judge Arthur Engoron saddled Trump with a half-billion dollars in penalties and interest until an appellate court finally vacated the judgment as absurdly unconstitutional. James had campaigned for Attorney General in New York on the explicit promise to “get Trump,” and set the precedent for open season on mortgage fraud. Trump supporters wasted no time in fighting fire with fire, and now, suddenly, everyone’s shocked, shocked at the results of opening Pandora’s Box.
We hate to say We told you so, but … we did. Repeatedly.
This will likely have to go to the Supreme Court, along with James’ case against Trump, the equally absurd and political Alvin Bragg prosecution, and the rest of the lawfare detritus of the past few years. The Supreme Court made it clear in its Trump v Wilcox decision that it sees the Fed as distinct from other executive-branch agencies, so Cook and Lowell may convince them to shut Trump down. However, the statute governing the Fed does allow presidents to dismiss governors for just cause, and alleged fraud prior to appointment to this kind of position certainly falls somewhere in that ambit. Unless Cook comes up with a convincing explanation for how she claimed two primary residences at the same time, the justices may well wash their hands of the issue and let Trump give her the boot.
In the meantime, pass the popcorn and watch the lawfare cheerleaders of 2021-4 suddenly advocate for a cease-fire.
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