Lisa Cook’s fight to avoid federal reserve removal began Friday morning in a federal court in Washington, DC
After more than two hours of oral arguments, the hearing between the legal team of Cook and the Trump administration ended without the judge saying a temporary restriction order that could block Cook’s dismissal. What happens next was not clear immediately.
“This case obviously raises important questions” in relation to the Federal Reserve Board, Judge Jia Cobb said at the beginning of the hearing. Cobb also pointed out that Fed is a unique institution compared to other agencies.
Cook, the first black woman to serve at the Board of Governors of the Fed, is looking for a “emergency temporary restriction order” that confirms her ability to continue in her role while the merits of her case are heard.
President Donald Trump moved to fire her this week, citing accusations of mortgage fraud brought by one of his appointed politicians. Cook has not been accused of any crime.
Cook’s legal team highlighted that, saying that there was “no investigation or position” before their trigger attempt.
After Trump announced that he was saying goodbye to Cook, he said during a cabinet meeting: “We will have a majority shortly. So it will be great.”
On Friday, Cobb said Trump “explicitly” said he will soon ensure that the majority of the Fed Board made it “uncomfortable.”
The judicial battle could give much more than the future of Cook’s mandate in the Central Bank. At stake is the independence of the Federal Reserve, the most important central bank in the world, in charge of maintaining inflation and labor market.
As the head of JPMorgan, the American economist Michael Feroli, the fed cook shot, if he succeeds, “would create the second vacancy on the board in less than a month and allow the president to move that body in one more direction to his taste.”
“If the president was successful, the result would be transcendental,” Feroli added.
Obtaining a majority at the Fed Board does not give the nominees to the Central Bank of Trump power to raise, reduce interest rates without changes, but their nominees could, as soon as February, reject renewing or confirming a new period of four years for the regional bank presidents of the Fed Fed that vote in interest rates.
These presidents are key to the Federal Open Market Committee of 12 members, which includes the president of the FED, six Governors of the FED and five regional presidents of the Fed. These presidents come from banks of the Federal Reserve of New York and San Francisco to Chicago and Atlanta.
The decrease in confirming certain regional presidents until they are the taste of the Trump nominees could drastically change the way in which the FED fees fixing committee works.
Already, two of Trump’s nominees serve at the Board of Fed. Michelle Bowman and Christopher Waller abstained a vote in 2023 to approve the president of the Chicago Fed, Austan Goolsbee, a former economic advisor of President Barack Obam open records.
The argument of the court court focused on the accusations made by the director of the Federal Housing Finance Authority of Trump, Bill Ablicte. He has affirmed that Cook committed mortgage fraud before becoming governor of the Fed.
On Thursday night, Abundo said he made a “second criminal referral” to the Department of Justice regarding Cook mortgages. About said that he included “alleged misrepresentations about his properties to the United States government during his time as governor of the Federal Reserve.”
Cook’s legal team responded to Bustle on Friday morning.
“This is an obvious smear campaign aimed at discrediting Governor Cook for a political agent who has resorted to social networks more than 30 times in the last two days and demanded his removal before any review of the facts or evidence,” they said. “Nothing in these vague and without foundation accusations has some relevance for the role of the Gov Cook government in the Federal Reserve, and in no way justify its elimination of the Board.”
The Federal Reserve, in a presentation, said it did not plan to offer arguments in the case, but sought a “fast decision” that “would eliminate the existing uncertainty cloud.”
The Trump administration, in turn, asked the Court to deny Cook’s temporary restriction order, saying that he did not offer any defense of public or private charges. “The elimination of ‘Causa’ is a broad standard, and a congress has granted to the president’s discretion,” said the administration’s presentation.
The broader demand for Cook against the Administration seeks a “statement that the alleged dismissal of the president of President Trump … is illegal and null and that Governor Cook remains an active member of the Board of Governors of the Federal Reserve.” It also seeks a declaration of the court that “that an accusation without the foundation of mortgage fraud before the confirmation of a governor is not a cause of elimination.”
According to the legislation created by the Federal Reserve, the only reason why a governor can be eliminated from his role is “for cause”, which is generally considered some type of irregularities. Trump’s termination letter to Cook said the administration believes that “it may have made false statements about one or more mortgage requests.”
At Friday’s audience, Cook’s legal team said the “Locos midnight tweets” cannot be the “cause.” They also said that the administration did not give a cook warning to present its history side.
Cook’s lawyers have emphasized the use of “May” in Trump’s letter, saying that the brace claims have no basis.
