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Donald Trump’s legal team told the Supreme Court on Friday that forcing Lisa Cook out of the Federal Reserve Board won’t crash the financial markets.
The Department of Justice, through Solicitor General D. John Sauer, argued that Trump has the legal right to remove Cook now, even while her lawsuit over the firing is still in court. According to Sauer, the president is facing “irreparable harm” because lower courts are blocking him from finalizing the removal.
Sauer wrote that letting Trump fire Lisa for alleged financial misconduct doesn’t interfere with the Fed’s independence. He added that removing her would not cause a “financial market disaster.”
The DOJ wants the court to grant a stay so Cook’s ouster can move forward immediately. Trump fired her in late August, citing possible mortgage fraud tied to two properties she claimed as her “primary residence” before she joined the Fed in 2022.
Lisa denies charges while court fight escalates
Lisa has denied committing mortgage fraud. Her legal team fired back in a Supreme Court brief on Thursday, accusing Trump of trying to gut the Fed’s independence. They said his request for a stay is really an attempt to get the court to “act on an emergency basis to eviscerate the independence of the Federal Reserve Board.” They’re pointing to the Federal Reserve Act of 1913, which says a president can only remove a Fed governor “for cause.”
Her lawyers argued that the charges Trump is using aren’t valid under that law. “The manufactured charges,” they wrote, are based on events that happened before she joined the Board, and “fail to satisfy” the legal standard. They also said granting the stay would send a message that the Fed is now under presidential control, warning it would “risk chaos and disruption” in financial markets.
Sauer pushed back in a Friday filing, saying it’s unclear why markets should panic over misconduct that happened before appointment, but stay calm over in-office violations. He questioned why anyone would be comfortable with “newly detected fraudsters” staying on the Board just because the statute of limitations had run out.
Bessent’s mortgage history mirrors Lisa’s situation
The core issue is about Lisa signing loan documents in 2021 that listed two different homes as her primary residence. One was a $203,000 house in Michigan, the other a $540,000 condo in Atlanta.
Both had loan agreements from separate credit unions, and both required her to claim the properties as her main residence for one year. But Bloomberg reviewed a document from the Georgia lender that described the Atlanta unit as a “vacation home,” suggesting they weren’t expecting full-time occupancy.
This isn’t the first time this kind of mortgage conflict has come up. Back in 2007, Trump’s Treasury Secretary, Scott Bessent, also pledged two homes as his “principal residence” on the same day. One was a mansion in Bedford Hills, New York. The other was a beachfront property in Provincetown, Massachusetts. Both were signed off by a lawyer with power of attorney. Experts later said that kind of paperwork mix-up wasn’t necessarily fraud.
In a letter to Lisa last month, Trump said her mortgage contradictions were “potentially criminal conduct,” or at the very least “gross negligence.” He argued it was reason enough to remove her from the Fed. The move also came as Trump ramped up pressure on the Fed to cut rates more quickly. Cook is now in court challenging her dismissal, saying the charges are false.
Bessent was asked about Trump’s decision in an appearance on Fox Business. He said, “There are people who think that President Trump is putting undue pressure on the Fed. And there are people like President Trump and myself who think that if a Fed official committed mortgage fraud, that this should be examined, and that they shouldn’t be serving as one of the nation’s leading financial regulators.”
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