Trump admin asks Supreme Court to allow Fed governor Lisa Cook firing

The Trump administration on Thursday asked the Supreme Court to lift lower court rulings that have blocked President Donald Trump from firing Federal Reserve Governor Lisa Cook.

The request came a day after Cook participated in a meeting of the Fed’s Federal Open Market Committee, which decided to cut its benchmark overnight lending rate by a quarter percentage point.

“This application involves yet another case of improper judicial interference with the President’s removal authority — here, interference with the President’s authority to remove members of the Federal Reserve Board of Governors for cause,” Solicitor General D. John Sauer wrote in the Justice Department’s filing Thursday at the Supreme Court.

Trump said on Aug. 25 that he was firing Cook from the seven-member Fed Board, citing allegations that she committed mortgage fraud in connection with two residences she owns.

Cook, who denies wrongdoing, sued Trump to block her removal, arguing he lacked the required legal cause to do so.

A federal district court judge in Washington, D.C., on Sept. 9 barred Trump from firing Cook as her suit plays out. The Justice Department asked a three-judge panel on the Circuit Court of Appeals in Washington to stay that order, and that the panel do so before the FOMC met.

The appeals panel in a 2-1 ruling on Monday night refused that request, effectively allowing Cook to remain in her job and to participate in the FOMC deliberations.

Sauer said that the Supreme Court, for several reasons, should stay the district court judge’s preliminary injunction reinstating Cook to the Fed while her suit is pending.

He said that the Justice Department is likely to prevail in the lawsuit “because Cook lacks a Fifth Amendment property interest in her continued service as a Governor of the Federal Reserve System,” and that her job is not protected by due process considerations.

Sauer also disputed the judge’s alternative finding that Trump’s rationale for firing Cook for “cause” is not valid because her alleged conduct occurred before she was appointed to the Fed.

“The Federal Reserve Act’s broad ‘for cause’ provision rules out removal for no reason at all, or for policy disagreement,” Sauer wrote.

“But so long as the President identifies a cause, the determination of ‘some cause relating to the conduct, ability, fitness, or competence of the officer’ is within the President’s unreviewable discretion.”

Sauer said, “Cook had made contradictory representations in two mortgage agreements a short time apart, claiming that both a property in Michigan and a property in Georgia would simultaneously serve as her principal residence.”

“Each mortgage agreement described the representation as material to the lender, reflecting the reality that lenders usually offer lower interest rates for principal-residence mortgages because they view such mortgages as less risky,” Sauer wrote.

“When her apparent misconduct came to light, the President determined that Cook’s ‘deceitful and potentially criminal conduct in a financial matter’ renders her unfit to continue serving on the Federal Reserve Board, and at a minimum demonstrates ‘the sort of gross negligence in financial transactions that calls into question [her] competence and trustworthiness as a financial regulator,’ “Sauer wrote.

The solicitor general also argued that the district court judge “lacked authority to order reinstatement as an equitable remedy for the removal of an officer of the United States, as we have discussed in several recent stay applications.”

If Trump ultimately prevails in firing Cook, he would be poised to have nominated four out of the seven Fed governors.

On Tuesday, the Senate narrowly confirmed White House Council of Economic Advisors Stephen Miran as a Fed governor. Trump nominated Miran to serve the remainder of Fed Governor Adriana Kugler’s term, which ends Jan. 31.

Kugler unexpectedly resigned in August, without giving a reason.

Miran participated in the FOMC meeting this week.