The Trump administration is taking its bid to remove Federal Reserve Governor Lisa Cook to the Supreme Court, saying she shouldn’t be allowed to continue serving on the central bank’s board while she fights to keep her job in a lower court.
U.S. District Judge Jia Cobb ruled on Sept. 9 that Trump’s move to fire Cook over allegations that she claimed two homes as her primary residence likely violated her Fifth Amendment right to due process. While Federal Reserve governors can be removed “for cause,” that provision applies only to behavior in office, Cobb ruled.
An appeals court declined to intervene, issuing a Sept. 15 order that has allowed Cook to remain on the central bank’s board while she contests the legality of President Trump’s Aug. 25 order removing her from her position.
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Cook participated in this week’s Fed meeting, in which she and other Fed policymakers voted to lower short-term interest rates by a quarter of a percentage point. The Fed’s final two rate-setting meetings of the year conclude on Oct. 29 and Dec. 10.
The Trump administration signaled it would take the case to the Supreme Court, which it did Thursday.
“The question whether Cook’s removal is lawful warrants this Court’s review, given the significance of the removal power to the President’s ability to supervise the Executive Branch and the importance of the Federal Reserve Board as a federal agency,” Solicitor General John Sauer argued in the Sept. 18 filing.
In another case earlier this year, the Supreme Court refused to reinstate a member of the National Labor Relations Board while she fought her removal in court.
But in that case, the high court made it clear that its May 22 order did not apply to the constitutionality of for-cause removal protections for members of the Federal Reserve’s Board of Governors, or other members of the rate-setting Federal Open Market Committee.
In seeking to stay Judge Cobb’s injunction allowing Cook to continue serving on the Fed’s board of governors, Sauer said the Trump administration “does not contest the constitutionality of the Federal Reserve Board’s for-cause removal provision.”
Instead, it seeks to “explain how the president’s removal of Cook complies with that provision.”
The Trump administration has alleged that Cook claimed two separate properties in Michigan and Georgia as her principal residence. Her attorneys maintain that “she did not ever commit mortgage fraud,” and she has not been charged with any crime.
In notifying Cook that he was removing her from her position, Trump stopped short of accusing her of mortgage fraud, but characterized the allegations against her as “deceitful and potentially criminal conduct.”
“The President’s strong concerns about the appearance of mortgage fraud, based on facially contradictory representations made to obtain mortgages by someone whose job is to set interest rates that affect Americans’ mortgages, satisfies any conception of cause,” the Trump administration now maintains. “That is especially true here, where Cook has not disputed any material fact or offered any plausible justification for her conduct.”
As for arguments that Cook has been deprived of due process, the Trump administration maintains that unlike teachers or lower-level civil servants, “principal officers” are not entitled to a notice and hearing before removal. Requiring the executive branch to jump through such hoops, “would wreak havoc on sensitive presidential decision-making.”
Cook’s representatives did not respond to a request for comment from Inman.
Lying about who will occupy a home can be a criminal offense, particularly if a lender is harmed by granting the borrower a lower interest rate or more favorable loan terms.
But no formal charges have been filed against Cook. Trump’s move to dismiss her followed an Aug. 15 criminal referral published on the social media platform X by Federal Housing Finance Agency (FHFA) Director Bill Pulte.
Pulte’s criminal referral of Cook — and similar allegations he’s levied against New York Attorney General James and Democratic Sen. Adam Schiff — have raised objections that he’s “weaponizing” the FHFA, which regulates Fannie Mae and Freddie Mac, to intimidate Trump administration opponents.
Pulte — who also took a leading role in the Trump administration’s pressure campaign against Fed Chair Jerome Powell to lower rates or resign — claims criticism of his actions are attempts by politicians and the news media to intimidate him.
The Wall Street Journal’s conservative editorial board, for instance, denounced Pulte’s criminal referrals of Cook, James and Schiff as “an ominous turn in political lawfare.”
Pulte and Ed Martin, who heads the Department of Justice’s “Weaponizations Working Group,” have pressured federal prosecutors to bring mortgage fraud charges against James, “despite investigators so far failing to find sufficient evidence supporting such charges,” ABC News reported Wednesday, citing anonymous sources.
“After a five-month investigation and interviews with more than a dozen witnesses, federal prosecutors have so far uncovered no clear evidence that James knowingly made false statements to a financial institution to secure favorable terms on a mortgage for her Virginia home,” ABC News reported.
The White House, Department of Justice and FHFA declined ABC’s requests for comment.
Other news media outlets have uncovered details that could undermine Pulte’s claims against Cook, should she ever be charged — and raised questions about whether Republicans are being subjected to the same level of scrutiny.
Cook specified on a loan estimate that her Atlanta condo would be a “vacation home,” and described the property as a second home on a request for security clearance, the Associated Press reported on Sept. 12.
ProPublica has reported that three Trump Cabinet members have claimed more than one home as a principal residence: Labor Secretary Lori Chavez-DeRemer, Transportation Secretary Sean Duffy, and Environmental Protection Agency chief Lee Zeldin.
The three Trump Cabinet members denied wrongdoing, and a White House spokesperson called ProPublica’s reporting a “hit piece.”
When Reuters pulled public records for properties owned by Pulte’s father and stepmother, it found they’d claimed “homestead exemptions” for two primary residences in Michigan and Florida since 2020.
Treasury Secretary Scott Bessent took out mortgages in 2007 on two homes in New York and Massachusetts that were both designated as principal residences, Bloomberg reported Wednesday.
There’s “no sign of any wrongdoing on his part, mortgage experts say. Rather, his case demonstrates that an incongruity in home-loan filings isn’t necessarily proof of fraud,” Bloomberg reported.
The Trump administration’s attempts to exert control over the Fed have some economists warning that undermining investors’ confidence in the central bank’s independence could have unintended consequences.
Because the Fed doesn’t have direct control over long-term interest rates, Treasury yields and mortgage rates might go up if the Fed cut short-term rates without having tamed inflation.
That’s what happened last year, when the Fed cut the short-term federal funds rate by a full percentage point at its final three meetings of 2024. Mortgage rates went up by an equal amount as investors in mortgage-backed securities demanded higher returns as inflation moved away from the central bank’s 2 percent target.
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