WASHINGTON — In a case that involves loans from several credit unions, Federal Reserve Gov. Lisa Cook’s lawyers are arguing there is no legitimate legal basis for President Donald Trump to remove her from the central bank, responding to a White House effort to establish cause for dismissing the Biden appointee over disputed mortgage documents.
Cook’s attorneys submitted their response to the White House and distributed it to reporters Wednesday evening, Axios reported. The filing came about three weeks after the White House asked Cook to respond formally to allegations involving how she characterized residences on mortgage documents, Axios reported.
Axios further noted the dispute could have significant implications for the Federal Reserve’s independence by helping determine the circumstances under which a president can remove a Fed governor for cause.
Cook’s term on the Federal Reserve Board runs through Jan. 31, 2038.
Loans From Credit Unions
As the CU Daily reported earlier, the two loans cited in the original criminal referral from Federal Housing Finance Agency Director Bill Pulte are:
- University of Michigan Credit Union (UMCU) — Cook obtained a $203,000, 15-year mortgage on her home in Ann Arbor, Mich., on June 18, 2021. The mortgage documents identified the property as her principal residence.
- Bank-Fund Staff Federal Credit Union (BFSFCU) — Cook obtained a $540,000, 30-year mortgage on a condominium in Atlanta on July 2, 2021, about two weeks later. The mortgage also contained principal-residence language.
As Reuters reported earlier, Cook obtained a May 28, 2021, loan estimate prepared by Bank-Fund Staff FCU for the Atlanta property that explicitly listed its use as “Vacation Home.” That document indicates Cook told the credit union before closing that Atlanta would not be her primary residence. Reuters reported that two independent real-estate experts said the document undercuts the allegation that Cook deceived BFSFCU about how she intended to use the property.
‘Entirely Inadvertent’
Her lawyers contend any errors in the mortgage documents were “an entirely inadvertent oversight” and that Cook did not intentionally mislead her lenders.
“There is no legitimate basis for” removing Cook, her attorneys argued, according to Axios.
Trump first attempted to fire Cook about a year ago after Pulte raised outlined above.
The Federal Reserve Act provides governors with 14-year terms, a structure intended to help insulate the central bank from political pressure. The law permits a president to remove a governor “for cause.”
The U.S. Supreme Court subsequently ruled Cook could remain in office while Trump’s attempted dismissal was litigated. The court, however, did not establish precise standards for what constitutes sufficient cause to remove a Fed governor or the process a president must follow to establish it, Axios reported.
The White House has since pursued a more formal process.
Axios noted that earlier this month, White House Deputy Chief of Staff Dan Scavino sent Cook a letter citing the mortgage issues and requesting her response.
Lawyer Responds
Cook’s attorney, Abbe David Lowell, said the circumstances surrounding a condominium Cook purchased in Atlanta show she was seeking financing for a second home rather than attempting to misrepresent it as her primary residence.
“The process for seeking financing for the Atlanta condominium … began with Governor Cook using the lender’s website to seek information about a ‘vacation home’ mortgage — a clear indication of the loan type she was looking to acquire,” Lowell wrote, according to Axios.
Lowell said the lender already knew Cook’s circumstances because it had previously worked with her to refinance a Massachusetts property.
“The lender, which previously worked with Governor Cook to refinance her Massachusetts property earlier that year, knew that she had lived in Michigan for more than 15 years and worked full-time as a tenured professor at Michigan State University,” Lowell wrote, according to Axios. “Governor Cook gave no indication that she was leaving to take any new job in Atlanta.”
Lawyers Cite Other Records
Axios further reported that Cook’s attorneys said other documents support their argument that she considered Michigan her primary residence.
Among the evidence cited by her lawyers:
- Cook regularly identified Michigan as her “primary residence” or “permanent residence.”
- She identified the Atlanta property as a “2nd Home.”
- Her lender was aware of her employment and residency history in Michigan.
- Her initial inquiry about financing for the Atlanta condominium involved a vacation-home mortgage.
“Governor Cook’s actions demonstrate that there was no intentional misconduct and zero intent to defraud or mislead,” Lowell wrote, according to Axios.
Axios said Cook’s lawyers also cited media reports involving Trump and five members of his Cabinet who have faced questions about representations of primary residences on property-related documents. Those cited included Treasury Secretary Scott Bessent, according to Axios.
