US judge sets quick schedule in Fed Governor Cook’s lawsuit over firing

Why is Cook suing Trump admin?

Cook filed her lawsuit on Thursday against Trump and the Federal Reserve. She said the President’s allegation that she committed mortgage fraud before taking office does not give him the legal authority to remove her.

In court filings, she described the claims as “unsubstantiated and unproven.” Cook argued that even if the alleged conduct took place, it happened before she was confirmed by the Senate in 2022 and so cannot be grounds for dismissal.

“There is no conceivable interpretation of ‘for cause’ removal protection that would allow the President to fire Governor Cook, either for his true motive or the pretextual one he has invented,” Cook said in her motion, according to Reuters.

What are the allegations against fired Fed Governor?

Trump has claimed that Cook listed separate homes in Michigan and Georgia as her primary residence on mortgage applications in 2021, which could have allowed her to secure lower interest rates.

His lawyers argued in court that alleged mortgage fraud is sufficient cause to remove a Fed governor, regardless of when it took place. They also said that shielding Fed officials from removal could infringe on the president’s constitutional powers.

William Pulte, Trump’s appointee to head the Federal Housing Finance Agency, first raised questions about Cook’s mortgages earlier this month.

Why does the case matter?

Under the law that created the Federal Reserve, governors can only be removed “for cause,” but the term is not defined and has never been tested in court. No president has ever removed a Fed governor.

The Fed said in a filing on Friday that it is not taking a position in the case but wants a “prompt ruling” to resolve the uncertainty.

The case is expected to reach the US Supreme Court. In May, the justices said the Fed has a unique structure and history that could set it apart from other agencies where Trump has successfully claimed the power to fire officials.

What’s at stake?

If Cook is removed, Trump would gain a fourth appointment to the Fed’s seven-member board. He has frequently criticised Fed Chair Jerome Powell for not lowering interest rates but has stopped short of threatening to remove him before his term ends in May.

The Fed is widely expected to cut rates at its 16–17 September policy meeting.