Lisa Cook, governor of the US Federal Reserve, speaks at the Peterson Institute For International Economics in Washington, DC, US, on Thursday, Oct. 6, 2022.
Ting Shen | Bloomberg | Getty Images
President Donald Trump‘s firing of Federal Reserve Governor Lisa Cook for alleged misconduct would not cause “financial market disaster,” the Department of Justice argued in a Supreme Court filing Friday.
Solicitor General D. John Sauer made that argument as he urged the high court to let Trump’s bid to fire Cook take effect while proceedings in her lawsuit against the president continue.
Trump, argued Sauer, “suffers irreparable harm” from lower-court rulings ordering Cook’s reinstatement for the time being.
On the other hand, “recognizing the President’s power to remove Governors for apparent financial misfeasance would not compromise the Federal Reserve’s policy independence,” Sauer wrote.
“Nor would removing Cook on that basis usher financial market disaster,” he added.
Trump moved to fire Cook in late August, citing allegations of mortgage fraud raised by U.S. housing finance agency chief Bill Pulte. Cook is alleged to have claimed two properties as her primary residence in mortgage documents signed prior to her appointment to the Fed in 2022.
Cook has denied committing mortgage fraud.
In a Supreme Court filing Thursday, Cook’s attorneys argued that Trump’s request for a “stay” to allow her removal is effectively asking the justices “to act on an emergency basis to eviscerate the independence of the Federal Reserve Board.”
While Trump is allowed to remove Fed governors, the Federal Reserve Act of 1913 only allows him to do so “for cause.”
Cook’s attorneys argued that Trump’s “manufactured charges” fail to satisfy that requirement, noting they are “based on conduct that predates her service on the Board.”
They also argued, “A stay from this Court would signal to the financial markets that the Federal Reserve no longer enjoys its traditional independence, risking chaos and disruption.”
Sauer, in Friday’s Supreme Court filing, replied, “It is not apparent why financial markets would be spooked by removals for pre-confirmation but not in-office financial misconduct, or why they would derive comfort from the prospect that newly detected fraudsters could serve on the Federal Reserve Board so long as the statute of limitations has run.”
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