By Humeyra Pamuk and Ryan Patrick Jones
Aug 7 (Reuters) – U.S. President Donald Trump is renewing his effort to fire Federal Reserve Governor Lisa Cook, keeping alive his assault on the central bank’s independence even after the U.S. Supreme Court in June dealt him a significant setback in his bid to remove her earlier this year, according to a letter seen by Reuters.
The White House told Cook in a letter this week that the president was “considering” removing her from her role and demanded she respond to unproven mortgage fraud allegations within three weeks — allegations her attorney called “baseless.”
The salvo against Cook is the second time this week Trump has restarted an effort to take actions that the Supreme Court blocked earlier this year. Trump earlier this week also issued another order attempting to limit birthright citizenship after the high court ruled against his previous effort to limit who is automatically considered a U.S. citizen.
The letter to Cook, signed by Deputy Chief of Staff Dan Scavino and first reported by ABC News, alleged that she committed crimes that could be punishable by up to 30 years in prison and that her conduct constituted negligence that called into question her trustworthiness as a Fed governor.
In a statement, Cook’s lawyer said “there is no valid cause” for removing Cook from her position.
“As we did before, we will challenge this latest pretext and preserve her position and the historic role of the Fed,” attorney Abbe D. Lowell said.
The Federal Reserve and White House had no comment.
Trump last year cited mortgage fraud in trying to fire Cook, the first Black woman to serve as a Fed governor. Cook denied the allegations, calling them a pretext to remove her for monetary policy differences.
The U.S. Supreme Court refused in June to allow the firing, standing firm to preserve the central bank’s cherished independence against the Republican president’s unprecedented challenge.
Trump repeatedly threatened to fire former Fed Chair Jerome Powell for refusing to bow to the president’s demands that he lower interest rates.
His hand-picked successor to Powell, Kevin Warsh, took the reins in May. Since then, Trump has redirected his criticisms at other members of the Fed board, a majority of whom were appointed by Trump’s predecessor, Democrat Joe Biden, while saying he will not be criticizing Warsh, who has not as yet delivered Trump’s wished-for rate cuts.
FOR CAUSE VS AT WILL
The Supreme Court’s 5-4 ruling blocked Trump from removing Cook for now, providing a safeguard for the Fed specifically.
No other president since the central bank’s founding in 1913 had sought to oust a Fed governor.
Conservative Chief Justice John Roberts, who authored the high court ruling, said Trump had “failed to afford Cook the procedural protections to which she was entitled by statute. Without such protections, she could not properly dispute the charges the president laid against her.”
While the ruling definitively protects Fed officials from being fired at will by a president, the court said its ruling was not deciding the validity of the factual dispute in the case. It has since returned the case to lower courts.
“It at least remains an open question what precisely happened here, and indeed whether Cook committed ‘gross negligence,’ let alone ‘deceitful and potentially criminal conduct,’ as the president’s letter alleges,” Roberts wrote.
CRIMINAL REFERRAL
The Scavino letter to Cook resurfaces unproven allegations of mortgage fraud made last year by Federal Housing Finance Agency Director William Pulte, who asked the Justice Department last year to open a criminal investigation into Cook and others over alleged mortgage fraud.
There has been no indication of any such criminal investigation moving forward, and a Reuters report last year showed Cook in submissions to the lender for one of the homes at issue had listed it as a vacation property. Reuters subsequently reported the local tax authority in Michigan said Cook had not broken rules for tax breaks on a home there that Cook declared her primary residence.
U.S. District Judge Jia Cobb in September ruled that Trump’s attempt to remove Cook without notice or a hearing likely violated her right to due process under the U.S. Constitution’s Fifth Amendment.
Cobb also said the allegations likely were not legally sufficient to remove Cook under the Federal Reserve Act as they relate to conduct that occurred before she served in the post.
Roberts, in his ruling, did not agree with that standard for cause but said nonetheless the standard to meet for dismissal of a Fed governor would need to be a “substantial threshold,” and that Cook must be able to respond to the charges against her.
(Reporting by Humeyra Pamuk in Washington and Ryan Patrick Jones in Toronto; additional reporting by Bhargav Acharya; editing by Michelle Nichols and David Gaffen)
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