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A federal judge in Washington, D.C., on Friday grilled lawyers for the Justice Department and Lisa Cook over President Donald Trump’s historic attempt to fire her from the Federal Reserve.
The landmark case is almost certain to be kicked to the Supreme Court for review. Despite the high-stakes nature of the legal dispute, Friday’s hearing ended after more than two hours without clear resolution.
U.S. District Judge Jia Cobb, a Biden appointee, declined to immediately grant the temporary restraining order sought by Lisa Cook’s attorneys, which would keep her in her role on the Fed’s Board of Governors for now.
Cook’s lawyers included the request for the temporary restraining order in the lawsuit filed in federal court on Thursday, challenging Trump’s attempt to fire her from her position on the independent board due to allegations of mortgage fraud.
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Instead, Judge Cobb ordered both parties to submit any supplemental briefs to the court by Tuesday, shortly before she dismissed the lawyers for the long weekend.
Cobb noted the novelty of the case before her, which involves the first attempt by a sitting president to oust a Federal Reserve governor “for cause.”
The fraud allegations were first leveled by Bill Pulte, a Trump appointee to the federal agency that regulates Fannie Mae and Freddie Mac. He accused Cook of claiming two primary residences in two separate states in 2021, with the goal of obtaining more favorable loan conditions.
Trump followed up by posting a letter on Truth Social earlier this week that he had determined “sufficient cause” to fire Cook, a dismissal he said was “effective immediately,” prompting her attorneys to file the emergency lawsuit.
The crux of Friday’s arguments centered on the definition of what “for cause” provisions must entail for removal from the board under the Federal Reserve Act, or FRA, a law designed to shield members from the political whims of the commander in chief or members of Congress.
The arguments also centered on Cook’s claims in her lawsuit that Trump’s attempt to fire her amounts to an illegal effort to remove her from the Fed well before her tenure is slated to end in January 2038 to install his own nominee.
Lawyers for Cook argued that her firing was merely a “pretext” for Trump to secure a majority on the Fed board, a contention that Cobb admitted made her “uncomfortable.”
They also attempted to poke holes in the mortgage fraud allegations, which they said were made on social media and “backfilled.”
The case “obviously raises important questions” about the Federal Reserve Board, Cobb said shortly before adjourning court.
She also noted that she had not yet made a determination about the alleged “irreparable harm,” prompting her to set the Tuesday filing deadline.
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Cook’s attorneys argued Friday that Trump’s attempt to fire her violates her due process rights under the Fifth Amendment, as well as her statutory right to notice and a hearing under the Federal Reserve Act.
Her lawyer, Abbe Lowell, noted on several occasions that there was no “investigation or charge” from the administration prior to Trump’s abrupt announcement that he would fire Cook.
Lowell also vehemently disputed the Justice Department’s allegations that Cook had an “opportunity” to respond to the mortgage fraud accusations leveled by Bill Pulte, noting that they were made just 30 minutes before Trump called for Cook to be removed.
He told Cobb that it was the latest attempt by the Trump administration to “litigate by tweet.”
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Lawyers for the Trump administration, for their part, argued that the president has broad latitude to determine the “for cause” provision.
Justice Department attorney Yakoov Roth told Cobb that the determination of when to invoke the provision should be left to the president, regardless of whether it is viewed by others as “pretextual.”
“That sounds to me like the epitome of a discretionary determination, and that is when the president’s power is at [its] apex,” Roth said.
DOJ lawyers also noted that Cook, to date, has not disputed any of the allegations in question and argued there is “nothing she has said” about the allegations that would cause her to not be fired.
“What if the stated cause is demonstrably false?” Cobb asked, going on to cite hypothetical concerns that a president could, theoretically, use allegations to stack federal boards with majorities.
As for the issue of “irreparable harm,” Justice Department attorneys argued that it would be more harmful for Cook to remain in office, arguing that the “harm of having someone in office who is wrongfully there … outweighs the harm of someone being wrongfully removed from office.”
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Cook’s attorneys said Friday that in reviewing the lawsuit, the court need not itself establish a definition of what “cause” means under the Federal Reserve Act.
Instead, Lowell suggested, the court should instead work backwards to determine whether the accusations leveled by Pulte were in fact “backfilled” by Trump to form the basis of her removal.
“It’s very difficult to come up with an 11-page definition of what it is,” Lowell said Friday of the “cause” definition, adding that it is far easier to come up with a one-page definition of “what it’s not.”
“Whatever it is, it’s not this,” Lowell said.
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