“The best reading of the ‘for cause’ provision is that the bases for removal of a member of the Board of Governors are limited to grounds concerning a Governor’s behavior in office and whether they have been faithfully and effectively executing their statutory duties,” Cobb wrote.
Trump has accused Cook of committing mortgage fraud by signing documents in 2021 that listed more than one property as her permanent residence. Those mortgages were obtained before President Biden appointed her to the Fed in 2022.
Cook’s lawyer Abbe Lowell said in a statement that Cobb’s decision “recognizes and reaffirms” the Fed’s independence from political interference.
“Allowing the president to unlawfully remove Governor Cook on unsubstantiated and vague allegations would endanger the stability of our financial system and undermine the rule of law,” Lowell said.
The ruling comes before the Federal Reserve meets next week to vote on cutting the Fed funds rate, which could also lower mortgage rates — a top priority for Trump. Another key vote during that meeting may come from Stephen Miran, Trump’s pick to take the place of Fed Governor Adriana Kugler, who resigned on Aug. 1. The Senate is expected to vote on Miran’s confirmation this week.
Despite Trump’s effort to oust Cook, she has not been charged with any mortgage fraud. Federal Housing Finance Agency (FHFA) Director Bill Pulte sent two criminal referrals to Attorney General Pam Bondi on Aug. 15, which prompted Trump to attempt to dismiss Cook “for cause” on Aug. 25.
Cook has denied that she committed mortgage fraud and filed suit against President Trump on Aug. 28. On Sept. 4, the U.S. Department of Justice (DOJ) began examining whether Cook misrepresented the occupancy of three properties to secure more favorable mortgage terms.
Cook’s lawyers argue Trump’s attempt to fire her was politically driven, pointing to the president’s push to install loyalists at the Fed who would lower interest rates at his direction.
The White House, Federal Reserve and DOJ did not return HousingWire’s requests for comment on Tuesday evening.
