Lisa D. Cook on Wednesday fought back against President Trump’s latest attempt to try to oust her from her role at the Federal Reserve.
In a defiant reply, a lawyer for Ms. Cook stressed that she had committed no crime, nor had been charged with one, even as Mr. Trump had forged ahead with an attempt to dismiss her from the central bank over unproven allegations of mortgage fraud.
Ms. Cook, a Fed governor, and her lawyer submitted the formal filing in response to a letter from the White House, which renewed its attempts to fire Ms. Cook this month. Mr. Trump had tried, and failed, to fire her in a process that began last year, until the Supreme Court halted it, finding that the president did not afford her an ample opportunity to respond to the charges.
The Trump administration’s allegations against Ms. Cook hinge on her 2021 purchase of a condominium in Atlanta, which she listed as a “primary” residence in at least one mortgage document, despite never living there. Ms. Cook also maintained another home in Ann Arbor, Mich., which was also designated as a “primary” residence.
In his letter, Ms. Cook’s lawyer, Abbe David Lowell, said listing the Atlanta condo as a primary residence was an “entirely inadvertent oversight,” not fraud. He noted that Ms. Cook had correctly identified the property as a vacation home earlier in the mortgage application process, and said she had not received a preferential rate on her loan as a result of the error.
Ms. Cook had not yet been nominated to the Fed board at the time of the purchase.
Mr. Lowell also sought to argue that Mr. Trump and some of his other advisers had made similar designations on their own mortgage documents, citing public reporting.
For one example, Mr. Lowell pointed to a report from Bloomberg indicating that Scott Bessent, the Treasury secretary, had acquired mortgages on two homes in 2007 that had been designated as “primary” residences.
“President Trump has neither fired the secretary nor asked him to resign, seemingly understanding that Secretary Bessent’s actions do not disqualify him or cast doubt on his ‘competence and trustworthiness as a financial regulator’,” Mr. Lowell wrote.
The revival of the White House’s attacks against Ms. Cook followed a legal setback in June, when the Supreme Court ruled 5 to 4 that Ms. Cook should have been given the formal ability to contest the accusations against her. In siding with a lower court, the Supreme Court granted Ms. Cook the ability to continue serving out her term, which is set to end in 2038.
But in leaving many issues unresolved in their ruling, the justices gave the president the opportunity to try again after granting Ms. Cook adequate due process. The White House’s letter — signed by deputy chief of staff Dan Scavino — was the administration’s attempt to do that.
It gave Ms. Cook an Aug. 26 deadline to respond to its accusations and laid out in detail what the Fed governor was being accused of. It said that her actions “may be sufficient to demonstrate that you committed a crime, as you appear to have acquired mortgages that do not meet certain lending requirements and could have received favorable loan terms under fraudulent circumstances.”
“Based on these facts,” Mr. Scavino added in his letter, “a jury could find that you intended to defraud these institutions for your own benefit, but at a minimum, this conduct was grossly negligent and demonstrates that you are unfit for the office in which you serve as a controlling member of the Federal Reserve.”
Ms. Cook’s battle with Mr. Trump has hung heavily over the Fed, whose officials have sought legal affirmation of their special status among other independent agencies also targeted by Mr. Trump. On the day the Supreme Court ruled on Ms. Cook, the justices also determined that Mr. Trump could fire other independent government regulators despite federal laws meant to protect them from politicization.
Under the Federal Reserve Act of 1913, Congress erected specific guardrails aimed at shielding the central bank from political encroachment. Lawmakers did so in recognition of the enormous economic costs associated with policymakers setting interest rates based on what was best for the person in the White House, rather than what was needed to keep inflation low and stable and the labor market on an even keel.
Among the protections were 14-year terms for governors, which enabled them to look beyond the typical political cycle, as well as a stipulation that a president could remove an official only “for cause.” That has long been interpreted as gross malfeasance or a neglect of duty while serving in the job.
Legal experts — and every living former Fed chair, six former Treasury secretaries and many other high-ranking ex-officials appointed by presidents of both parties — warned that any weakening of that removal protection would be catastrophic for the Fed’s independence. It would allow for presidents to oust officials over policy differences, all but ensuring that officials would be forced to cow to their demands, they argued.
Mr. Trump’s attack on Ms. Cook was also not an isolated incident. In the months before he took aim at Ms. Cook, the president repeatedly berated the central bank and its then-chair Jerome H. Powell with not only personal insults but threats to fire him. His main criticism was that the Fed was not lowering rates as much as he would like. The president said that was making the country’s debt payments more expensive and holding back an economic boom.
Shortly before the Supreme Court heard arguments in Ms. Cook’s case in January, the Justice Department advanced a criminal investigation into Mr. Powell for his handling of costly renovations at the central bank’s headquarters in Washington.
The Justice Department in April abandoned its investigation into Mr. Powell, whose term ended in May. Mr. Powell has remained at the Fed given that the legal threat against him could be revived at any point prompted. In announcing his decision to remain a governor, a position he can hold until January 2028, Mr. Powell cited Mr. Trump’s pressure campaign against the Fed and his concerns about the central bank’s independence.
Kevin M. Warsh assumed the position of chairman in May after being confirmed along party lines by the Senate.
