Member of the Federal Reserve Board of Governors Lisa Cook has sued President Donald Trump in Washington, alleging that he denied her due process in his attempt to fire her.
Her lawyers argue in the complaint that Trump violated the Federal Reserve Act by failing to provide Cook with a notice and hearing.
“This case challenges President Trump’s unprecedented and illegal attempt to remove Governor Cook from her position, which, if allowed to occur, would be the first of its kind in the Board’s history,” it reads.
“It would subvert the Federal Reserve Act ... which explicitly requires a showing of ‘cause’ for a Governor’s removal, which an unsubstantiated allegation about private mortgage applications submitted by Governor Cook prior to her Senate confirmation is not.”
Trump sent Cook a letter on Aug. 25 stating that he was removing her “for cause,” citing “sufficient reason” to believe that she had made false statements on one or more mortgage agreements.
“It is inconceivable that you were not aware of your first commitment when making the second,” Trump wrote. “It is impossible that you intended to honor both.”
“The conduct at issue exhibits the sort of gross negligence in financial transactions that calls into question your competence and trustworthiness as a financial regulator,” he wrote.
However, Cook claimed that Trump’s allegation of mortgage fraud was a way to undermine the independence of the Fed, whose monetary policy he has been criticizing.
“It is clear from the circumstances surrounding Governor Cook’s purported removal from the Federal Reserve Board that the mortgage allegations against her are pretextual, in order to effectuate her prompt removal and vacate a seat for President Trump to fill and forward his agenda to undermine the independence of the Federal Reserve,” the lawsuit reads.
The lawsuit states that the “allegation about conduct that predates Governor Cook’s Senate confirmation has never been investigated, much less proven,” and is not “grounds for removal” under the Federal Reserve Act.
The Federal Reserve Act allows presidents to remove members “for cause,” but it is unclear what constitutes a legitimate cause or how courts will interpret the statute.
Georgetown University law professor David Super told The Epoch Times that Trump’s allegations “could force the Supreme Court to decide what level of justification is required for a ‘for cause’ firing of a Federal Reserve board member.”
“In the past, this term has been limited to serious proven wrongdoing in office,” he said.
Beyond Trump’s reasoning, the complaint states that Supreme Court precedent required notice and hearing for removals that were purportedly “for cause.”
