Key filings in Fed independence suit due Thursday

Al Drago/Bloomberg

Federal Reserve Gov. Lisa Cook's attorneys filed additional briefs in her case against President Trump over his moves to oust her from her seat on the Fed board, and the judge overseeing the case has scheduled final briefs to be due Sept. 4.

Cook's attorney, Abbe Lowell, founder of Lowell & Associates, asked the court for additional time to file a brief in support of a temporary restraining order. The judge overseeing the case gave both Cook and Trump until Sept. 4 to file motions for or against the temporary order.

A joint status report shows that beyond an agreement that both parties will file additional documentation by Thursday, Cook and Trump do not agree on the steps that will follow beyond that.

Cook's attorney has proposed an expedited legal process in which opening motions and responses would be filed by Sept. 15, followed by a hearing soon after — potentially avoiding a trial. President Trump's legal team opposes the plan, arguing that while the legal issues related to Cook's request for emergency relief will be briefed by Sept. 4, the broader case requires discovery, including "the underlying facts giving rise to [the] termination." 

Despite the lack of a ruling, a decision on whether or not Cook can continue serving on the board will likely be made before the Federal Open Market Committee meets on Sept. 16 and 17. The Federal Reserve has urged the court to expedite its decision making "to remove the cloud of uncertainty."

In a brief filed Tuesday, Lowell reiterated that President Donald Trump's attempt to oust Cook from the board over alleged mortgage fraud was unlawful and that she should be allowed to continue her work at the central bank.

In documents filed with the U.S. District Court for the District of Columbia Tuesday, Cook's attorneys argued that points made by Trump's legal team last week should be rejected and the "status quo" — Cook's continued service on the Fed board — should be preserved via the issuance of a restraining order allowing her to continue her work on the Fed board while the case is litigated.

"Allowing the president to lock Governor Cook out of her office, even temporarily, would amount to a crack in the foundation of the Federal Reserve's near-century of independence," a filing from Sept. 2 reads. "That is a bell that could not be unrung, even if Governor Cook were ultimately reinstated.

"Governor Cook requests only that the court maintain the current state of affairs, as such a measure would uphold key equities and public interests, while imposing a minimal burden on the President, who is attempting to exercise power beyond his constitutional and statutory authority," the filing added.

Late last week, Trump's legal team dubbed Cook's request to continue as a member of the Fed board as "meritless" and said that the proceedings would destabilize governance at the central bank.

"Dr. Cook identifies no irreparable harm that requires overnight relief, or even relief within the next 14 days," Trump's attorneys argued in an Aug. 29 filingCook sued the president on Aug. 28 after Trump announced on social media that she was "removed" from her seat on the Fed board because she allegedly claimed primary residence on two mortgages before joining the central bank. Cook has not been charged with a crime.

Her suit notes that the Federal Reserve Act only allows the president to remove a Federal Reserve Board governor "for cause," and argues that the allegations presented by Trump do not meet that standard. 

This argument follows a widespread assumption that the suit will hinge on what counts as "cause" for dismissal and whether the president's judgement alone serves as the ultimate say for what infractions constitute cause for dismissal. Experts have previously posited that if "for cause" removal protections are found unconstitutional or are the president's alone to judge, this will allow the president to wield more control over who sits on the Federal Reserve board. 

The plot regarding Cook's alleged occupancy fraud has thickened as Bill Pulte, head of the Federal Housing Finance Agency, claimed Friday that there is a third property that Cook bought and claimed as a primary residence. The new redacted referral Pulte posted on social media involves a property Cook purchased in Cambridge, Massachusetts. Pulte alleges that four months before Cook took out loans in Georgia and Michigan, she represented a condominium property in Cambridge to be a second home. The alleged concern that Pulte flagged related to the Cambridge condo was that several months later she represented it to be an investment property she would rent out in other government filings.