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Cook Lawyer Says Fraud Claims Are Trump’s ‘Weapon of Choice’

(Bloomberg) -- President Donald Trump’s fraud allegations against Federal Reserve Governor Lisa Cook have become a “weapon of choice” to seek to remove officials who are obstacles to his agenda, her lawyer argued at the first hearing in her lawsuit challenging her firing.

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Abbe Lowell told a judge Friday in Washington that Trump’s repeated public statements criticizing the Fed’s work signaled a willingness to remove governors who refused to vote to lower interest rates. Trump’s motive, she argued, signaled he didn’t have the necessary cause to fire Cook.

The hearing, which lasted more than 90 minutes, caps weeks of sparring between Cook and the administration and signaled the beginning of a pitched legal fight over the president’s influence over the Fed.

Cook asked for the emergency hearing after requesting an order that would allow her to keep her job while she presses a lawsuit to block Trump from permanently ousting her. US District Judge Jia Cobb, who heard arguments from both sides, suggested she may not rule right away.

Justice Department attorney Yaakov Roth argued that Cook’s failure so far to explain the alleged mortgage discrepancies suggests she did something wrong and supports Trump’s right to remove her for cause. If there was an explanation, he said, “we would have heard it by now.”

Cook sued Trump on Thursday, arguing that his attempt to fire her was a power grab that could cause “irreparable harm” to the US economy. The president is seeking to remove her over claims by Federal Housing Finance Agency Director Bill Pulte that she lied on mortgage documents.

In the lawsuit, Cook suggested that an unintentional “clerical error” may have been behind the mortgage dispute.

Just before the hearing, the Justice Department said in a filing that courts should defer to Trump on whether he has sufficient “cause” to fire Cook. Her request for an order temporarily allowing her to remain employed should be denied, the government said. Cook is “highly unlikely to prevail on the merits” of her claim that Trump illegally fired her without cause, they argued.

“Removal for ‘cause’ is a capacious standard, and one Congress has vested in the discretion of the President,” the government said. “Even if it were subject to any judicial review — and over a century of caselaw suggests it is not — that review would have to be highly deferential, lest it intrude into the President’s constitutional authority over principal officers.”

A central claim of Cook’s lawsuit is that Trump violated her constitutional due process rights as well as the Federal Reserve Act by firing her without “cause,” a term that’s been defined to mean inefficiency; neglect of duty; and malfeasance, or wrongdoing, in office.

But the Justice Department argued that Cook was relying on an “artificially narrow interpretation” of what constitutes “cause” for her firing. In the hearing, Roth disputed Cook’s argument that she did not receive the necessary notice of the allegations against her because they were made in a social media post.

“You’re not suggesting what happened would satisfy due process requirements?” the judge asked Roth. He replied that he would.

(Updates with additional arguments from the Friday hearing starting in paragraph one.)