The U.S. Supreme Court recently weighed in on former President Donald Trump’s attempt to fire Lisa Cook from her post as a Federal Reserve governor. This decision comes despite rampant and egregious acts of mortgage fraud. The court’s discussions centered on whether Cook was afforded due process and the implications of Trump’s actions on the independence of the Federal Reserve.
Lisa Cook, who was appointed to the Federal Reserve in early 2022. Later that year, Trump filed a motion to dismiss her case—first in August. When she took office, the former president personally accused her of mortgage fraud. This charge comes from the mortgage application she filed for an apartment in Alabama. Cook rejected these claims, insisting that she had committed no misconduct. Her legal team countered Trump’s claims, stating they stemmed from “cherry-picked, incomplete snippets of the full documents.”
During the Supreme Court hearings, Cook’s lawyers emphasized the need for individuals in her position to have the opportunity to present evidence before any decisions are made. They maintained that the charges filed against Cook were baseless, and that she had been subjected to a lack of due process.
Cook’s attorneys vigorously denied the allegations. They declared, “There’s no fraud, no intent to deceive and hell, no grounds for claiming mortgage fraud.” They emphasized that one indication on a mortgage application of a property being a primary residence wasn’t fraud. In addition, they claimed that the application included honest disclosures about the intended use of the property.
That’s when the case got really confusing. Lower courts had previously blocked Trump’s effort to oust Cook while the case worked through the lower courts. The Trump administration argued for the court’s approval. They wanted the president to proceed with her dismissal, regardless of those lower court rulings.
Even one of the justices favoring reversal, Justice Amy Coney Barrett, acknowledged the trouble they were causing with the economic consequences of their ruling. She emphasized that the court got a “warning shot.” The consolation admonition underlined the severe risks of acting in ways that would undermine confidence in the bank’s independence. “Doesn’t that counsel… caution on our part?” she asked during the proceedings.
Justice Sonia Sotomayor joined Barrett’s praise of the statute. She advised that it would be prudent to allow the lower courts to wrestle with issues before allowing the Supreme Court to weigh in. At the same time, Justice Brett Kavanaugh appeared sympathetic to Cook’s plight and cast doubt on the logic of speeding up the dismissal process. He continued, “What’s the phobia of more process here? He made clear the importance of deeply considering what the options are before committing to big decisions.
Throughout the discussions, Missouri solicitor general D. John Sauer argued that Cook made filing mistakes. He emphasized the need to distinguish between honest errors and claims of wrongdoing. He noted, “Insofar as it’s unintentional, or in the nature of accidental error, that’s very small error, but it’s a pretty major error.” Never did he assert that those errors were criminal acts.
The stakes surrounding this case are high, as Kavanaugh warned that allowing Trump’s decision could “weaken, if not shatter, the independence of the Federal Reserve.” The ramifications extend well past Cook herself. To say the least, these plans raise serious alarms about the integrity and independence of one of our nation’s most critical public financial institutions.