President Trump correctly removed Lisa D. Cook from the Federal Reserve Board for improperly claiming on mortgage applications that residences in Michigan and Georgia both were her primary residences, the Trump Administration said in a brief filed with the Supreme Court.
"Following the statute, President Trump duly removed respondent Lisa Cook for 'deceitful and potentially criminal conduct in a financial matter' that renders her unfit to serve on the Nation's preeminent financial policymaking and regulatory body—a quintessential cause for removal," Solicitor General D. John Sauer wrote in the brief.
"The President's removal of Cook was a valid exercise of his authority," Sauer wrote.
The District Court and the D.C. Circuit Court ruled that Cook's firing was illegal, in part, because Cook's mortgage applications occurred before she joined the Fed and in part, because she was not afforded due process.
Trump asked the Supreme Court to stay the preliminary injunction issued by the District Court that restored Cook to her position.
The administration, in its brief, argued that despite many opportunities, Cook still has not attempted to deny, explain, or justify the facially contradictory, material representations in two mortgage agreements that she executed just two weeks apart—nor has she even said what facts, if any, she would dispute."
However, lawyers for Cook have asserted that reports confirm that Cook properly declared her Michigan home as her principal residence, and that as part of her mortgage application, she described the property in Georgia as a vacation home.
The Washington Post reports that it has (1) the Loan Estimate for the loan on the Georgia property and that the Loan Estimate identifies the property as a "vacation home" and (2) a form that Cook submitted to the Biden Administration in connection with her nomination to the Fed, that the form lists the Georgia property as a second home under a question about vacation homes and other "additional" properties.
Still Sauer said, "By providing for removals 'for cause,' Congress authorized the President to remove Governors for reasons related to their conduct, ability, fitness, or competence. That is exactly what the President did here."
Cook warned that her firing would undermine the independence of the Fed and erode public confidence in it.
And in a separate brief, 18 former Treasury Secretaries, Federal Reserve Board Chairs and Governors, Council of Economic Advisers Chairs and Economists agreed that Cook should not be fired.
Allowing Trump to fire Cook "would expose the Federal Reserve to political influences, thereby eroding public confidence in the Fed's independence," they said.
The administration disputed that contention, calling it a "strawman." The Fed does not depend on shielding Governors from the consequences of misconduct, the administration said. "To the contrary, the financial community and the public regard the Federal Reserve Board as a trustworthy institution in part because such individuals historically have not served on it," according to the administration.
We anticipate that the Supreme Court will act on the application for a stay before the end of this week.
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