Friday Morning Fireworks Ensue During Cook Vs. Trump Courtroom Showdown

Update (1220ET): It was fireworks in federal court Friday morning as lawyers for Federal Reserve Governor Lisa Cook squared off against the Trump administration after Trump fired her on Monday over mortgage malarkey.

Cook (who was busted in 2024 for plagiarism and only got her job because Kamala Harris was the tiebreaker vote during her confirmation) responded by filing a lawsuit – asking a judge to issue a temporary restraining order (TRO) which would allow her to keep her job, for now.

The drama kicked off at 9:30 a.m. before U.S. District Judge Jia Cobb, where Cook’s lawyer accused the White House of mounting a politically motivated power grab over claims of mortgage fraud as cover to oust Cook and stack the Fed with Trump loyalists.

“This is nothing more than a smear campaign,” insisted Abbe Lowell, Cook’s attorney. “Cause for the president means she won’t go along with the interest rate drop.”

The courtroom drama unfolded amid the backdrop of Federal Housing Finance Authority Chief Bill Pulte having dropped a Thursday night bombshell: a second “criminal referral” accusing Cook of “misrepresentations” about properties she owns – specifically that she claimed a second residence as an investment property, which follows Pulte’s initial criminal referral over Cook simultaneously claiming two properties as her ‘primary residence.’

Lowell torched the move as a desperate stunt:

“Nothing in these vague, unsubstantiated allegations has any relevance to Gov. Cook’s role at the Federal Reserve, and they in no way justify her removal from the Board.”

Apparently actual documents bearing Cook’s signature, which she hasn’t refuted, are now ‘unsubstantiated.’ What’s more, while Cook has denied any wrongdoing, she has yet to publicly explain her defense.

What’s Next?

Judge Cobb set an expedited briefing schedule, but stopped short of ruling on Cook’s TRO request Friday. A decision could come within days.

* * *

The Justice Department has filed a response to Federal Reserve Governor Lisa Cook’s lawsuit over her Monday firing – claiming that the President was within his right to boot her over allegations of mortgage fraud (with a third property disclosed by Federal Housing Finance Agency (FHFA) Director Bill Pulte last night), and that Cook is “highly unlikely to prevail on the merits.”

Trump’s legal team argues that the Federal Reserve Act (FRA) gives the President “broad discretion” to remove governors “for cause” and that courts cannot second-guess that judgment:

The Federal Reserve Act (FRA) empowers the President of the United States to appoint (by and with the advice and consent of the Senate) the members of the Board of Governors of the Federal Reserve System. 12 U.S.C. § 241. Those Governors serve for fixed terms, “unless sooner removed for cause by the President.” Id. § 242. The statute thus expressly contemplates that, even setting aside his Article II authority over principal officers, the President retains broad discretion to remove a Governor for “cause.”

Citing Reagan v. United States (1901) and Dalton v. Specter (1994), they write “Where a statute commits decisionmaking to the discretion of the President, judicial review of the President’s decision is not available,” therefore Cook cannot get a temporary restraining order allowing her to stay in her job.

Sufficient Cause Exists: Alleged Mortgage Misrepresentations

The filing claims the “cause” for Cook’s removal comes from allegedly false statements in two 2021 mortgage applications:

“In both agreements – entered within just weeks of each other – Dr. Cook represented that she would occupy each property as her ‘principal residence.’”

Trump’s legal team frames this as potential mortgage fraud:

“It is difficult, if not impossible, to see how Dr. Cook could possibly have honestly represented that she intended to occupy and use both a property in Michigan and a condominium in Atlanta as her ‘principal residence’ during the same period.”

They stress that criminal prosecution is not required:

“The President need not prove criminal acts beyond a reasonable doubt to remove a principal officer.”

To wit, “And under any standard, making facially contradictory statements in financial documents – whether a criminal burden of proof could be sustained or not – is more than sufficient ground for removing a senior financial regulator from office.”

She Never Denied It

The DOJ argues that Cook never rebutted the substance of the FHFA referral:

“Dr. Cook does not try to claim that the contradictory representations were somehow truthful, or maintain that she acted without scienter.”

Instead, she issued a statement:

“I have no intention of being bullied to step down from my position because of some questions raised in a tweet”

The filing claims this refusal to provide an explanation justifies removal:

“Dr. Cook’s refusal even to offer an explanation or defense makes it all the more impossible to conclude that the ‘cause’ standard is unsatisfied.”

Procedural Due Process Does Not Apply

In response to Cook’s claims that she was ‘deprived of notice’ and an opportunity to respond to the President’s concern over allegations of mortgage fraud, the DOJ notes that “no court has ever extended those due-process protections for employees to principal officers of the United States. Nor does the FRA purport to do so.”

The Trump admin also argues that principal officers like Federal Reserve governors have no property interest in their office.

“Dr. Cook had no property interest in her public office and was thus owed no notice or opportunity to be heard”

“Public office is not property’ and ‘the nature of the relation of a public officer to the public is inconsistent with either a property or a contract right.'”

Trump’s filing also argues that Cook did receive notice:

“The President gave Dr. Cook notice when he publicized the FHFA referral on August 20—and only acted to terminate her five days later, after it was clear that no adequate response was forthcoming.”

The DOJ also notes that Cook has no explanation for the allegations.

Incredibly, Dr. Cook even now hazards no explanation for her conduct and points to nothing she would say or prove in any “hearing” that would conceivably alter the President’s determination that the perception of financial misconduct alone is intolerable in this role. Under these circumstances, there is certainly no equitable basis for a reinstatement injunction.

Addressing Cook’s request for an injunction on her filing, the response asserts that recent decisions from the Supreme Court and the D.C. Circuit leave no doubt that reinstatement injunctions are improper.

Trump’s Stated Rationale Was Not Policy-Based

Cook hinted her firing stemmed from policy disagreements on Fed independence and interest rates. Trump’s filing denies this:

“The President did not invoke a policy disagreement as the cause for Dr. Cook’s removal. Rather, his letter … made clear that he was acting based on her ‘deceitful and potentially criminal conduct’ in connection with the mortgage agreements.”