A hearing in Federal Reserve Governor Lisa Cook’s lawsuit challenging President Trump‘s attempt to remove her from office has commenced.
Cook’s lawyer, Abbe Lowell, has confirmed that they are seeking a temporary restraining order to block the President’s decision. Lowell is arguing that the President’s actions are unlawful and that Cook’s removal would cause irreparable harm.
The dispute centers on the President’s claim that he has “sufficient cause” to fire Cook, citing allegations of mortgage fraud that allegedly occurred before she joined the Federal Reserve.
However, Cook’s lawyers argue that these allegations do not constitute “cause” for removal, as required by law. Lowell emphasized that “cause” is not defined in the Federal Reserve Act, but this ambiguity does not grant the President unlimited discretion to fire a governor.
Lowell pointed out that the President’s decision to fire Cook was based on a referral letter from Bill Pulte, which merely suggests that Cook “appears” to have done something wrong.
Notably, there was no investigational charge, and Lowell argues that this lack of evidence underscores the absence of legitimate cause for Cook’s removal. “Motive” is not the primary focus of Cook’s counsel’s argument, Lowell clarified. Instead, he asserts that a bad motive can illuminate the absence of cause.
In this context, Lowell highlighted Trump’s surrounding pressure on the Federal Reserve to lower interest rates as crucial context for the President’s willingness to fire Cook based on “a single social media posting”.
The Trump administration, however, maintains that the President has broad authority to fire Cook, arguing that the Federal Reserve Act’s undefined “cause” provision grants the President discretion in such matters.
This interpretation is contested by Cook’s lawyers, who argue that allowing the President to fire a governor without robust justification would undermine the independence of the Federal Reserve.
Cook’s lawsuit also alleges that the President violated the US Constitution by firing her without a hearing or notice. Her lawyers assert that the President would not have “cause” to remove a Federal Reserve Governor even if he possessed evidence of minor wrongdoing, such as “jaywalking in college”.
This argument underscores the importance of protecting the Fed’s independence and ensuring that its governors can make decisions without fear of political retribution.
The outcome of this case will likely have significant implications for the balance of power between the executive branch and the Federal Reserve. As the hearing continues, the court will need to determine what constitutes “cause” for removal and whether the President’s actions were lawful.
