Lisa Cook’s lawyer says that Trump’s dismissal letter was “illegal action”, promises to continue

“President Trump does not have the power to withdraw the governor from the Lisa Cook federal reserve,” said Abbe Lowell, a longtime lawyer from Washington who has represented figures from the two main political parties. “His attempt to dismiss, based solely on a reference letter, has no factual or legal basis. We will submit legal action contesting this illegal action.”

Trump’s unprecedented efforts to draw Cook should be at the Supreme Court and could more clearly define the limits of the president’s legal authority on the traditionally independent institution. The Fed exercises extensive power over the American economy by adjusting a short -term interest rate which can influence wider borrowing costs for things such as mortgages, car loans and commercial loans.

The federal reserve weighed Tuesday for the first time on the dismissal, claiming that it “would respect any court decision”.

The Fed also defended its independence from the policy: “Congress, through the Federal Reserve Act, orders that governors serve in long and fixed terms and can be deleted by the president only” for good “, said the Central Bank. “Long tenures and the protections for the abolition of governors serve as a vital guarantee, ensuring that monetary political decisions are based on data, economic analysis and long -term interests of the American people.”

But the Fed declaration did not answer a key question about Cook: whether it continues to serve the Fed while the legal affair takes place. Nor did it criticize Trump’s attempt to dismiss her.

Trump, a Republican, has repeatedly demanded that President Jerome Powell and the Fed rate adjustment committee have reduced her rate to increase the economy and reduce interest payments on the debt heap of $ 37 billions of the government.

If Trump succeeds in eliminating Cook from the Council of Governors of the Fed, he could erode the political independence of the Fed, which is considered essential to its ability to combat inflation because it allows the Fed to take unpopular measures such as the increase in interest rates. A less independent Fed could let the Americans pay higher interest rates, as investors would require higher return to have obligations to compensate for potentially higher inflation in the future, which increases borrowing costs throughout the economy.

Who is on the board?

Trump seems to have since concentrated his attention, after having appointed two members of the board of directors, Christopher Waller and Michelle Bowman, during his first mandate and appointed Steven Miran, a White House economist, to replace governor Adriana Kugler, who resigned unexpectedly on August 1.

Trump criticized Powell at a cabinet meeting on Tuesday and said “that we will have a majority very quickly” on the Fed.

The Fed board of directors oversees financial regulations and also votes on all interest rate decisions. Five of the 12 regional bank presidents of the Fed also have a vote, one of these five being still the New York Fed and the other four serving on a rotary basis.

Legal experts say that the statement of the Republican President he can draw Cook, who was appointed by Democratic President Joe Biden in 2022, is on fragile ground. But it is an unprecedented decision that did not play before the courts before, and the Supreme Court this year was much more ready to let the president withdraw officials from the agency than in the past.

“It is an illegal dismissal, but the president will discuss:” The Constitution allows me to do so, “said Lev Menand, professor of law at the University of Columbia and author of a book on the Fed. “And this argument has worked in a few other cases so far this year.”

Menand said that the Supreme Court interprets the meaning of the Constitution and “he can make a new constitutional law in this case”.

Allegations against Cook

Bill Pulte, one named by Trump to the agency that regulates mortgage giants Fannie Mae and Freddie Mac, brought the accusations last week. Pulte allegedly alleged that Cook had claimed two main residences – to Ann Arbor, Michigan and Atlanta – in 2021 to obtain better mortgage conditions. Mortgage rates are often higher on second homes or those purchased for rental.

The next most likely step for Cook is to ask for an injunction against Trump’s order which would allow him to continue his work as governor. But the situation puts the Fed in a difficult position.

“They have their own legal obligation to respect the law,” said Menand. “And that doesn’t mean doing what the president says.

Trump said in a letter published on Monday on his Truth social platform that he suppressed Cook in force immediately due to the allegations she had committed mortgage fraud.

Cook says she will not resign

Cook said on Monday evening that she would not resign. “President Trump claimed to dismiss me” in question “when no cause exists under the law, and he does not have the power to do so,” she said in a statement sent by e-mail. “I will not resign.”

The courts allowed the Trump administration to withdraw the commissioners of the National Labor Relations Board, the Merit System Protection Board and other independent agencies. However, the case of cook is different.

These layoffs were based on the idea that the president does not need to withdraw agency leaders because they exercise the executive power in his name, wrote the Supreme Court in an unsigned order in May.

In this same ordinance, the court suggested that Trump did not have the same freedom to the Fed, that the Court described an “quasi-private and quasi-private entity”.

Eliminate governors “for good”

The law governing the central bank, the Federal Reserve Act, includes a provision allowing the abolition of the Fed governors “for good”.

“For the cause”, he is generally interpreted as signifying embezzlement or a breach of duty by an official during his duties, not something fact before that person is named, said Menand.

To establish a dismissal “for the cause”, it is also necessary to conclude a conclusion in fact, said Scott Alvarez, the former lawyer general of the Fed and now auxiliary professor at Georgetown Law.

“We know that there are allegations of Bill Pulte, but Lisa has not yet been able to answer,” said Alvarez. “So we don’t know if they are true. Allegations are not because of. ”

Lowell said on Monday evening that “the reflex to Trump’s intimate intimidator was defective and that his requests had no processes, base or appropriate legal authority”, adding: “We will take all the necessary measures to prevent his attempted illegal measure”.

Cook is the first black woman to serve as governor. She was a Marshall scholarship and graduated from the University of Oxford and Spelman College, and she taught Michigan State University and Kennedy School of Government at Harvard University.

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The editors of the associated press Mark Sherman and Paul Wiseman contributed to this report.