Trump Names Three of His Own Appointees to Judge Fed Gov. Lisa Cook, Behind Closed Doors, Two Days After the Midterms

Federal Reserve Governor Lisa D. Cook in her official portrait. Photo: Federal Reserve Board via Wikimedia Commons (public domain)

The only real precedent anyone can find is 114 years old. In 1912, President William Howard Taft convened a “committee of inquiry” to weigh firing two members of the Board of General Appraisers, and the committee recommended he do it. Chief Justice John Roberts cited that episode in this year's Supreme Court ruling on Lisa Cook, CNBC noted, and President Trump has now dusted off the idea for her.

In a memorandum dated Wednesday and released Friday, Trump created a three-member panel to investigate “allegations that Federal Reserve Governor Lisa D. Cook made false statements in connection with one or more mortgage instruments,” and to report whether there is “cause” to remove her, according to the White House. Cook has denied the allegations from the start.

“As President, it is my job to ensure the laws are faithfully executed, including by firing subordinates who cannot be trusted to tell the truth and follow the law,” the memo says.

Who sits on the panel, and when it meets

The members are the president's top economic adviser, the chair of the Equal Employment Opportunity Commission and the director of the Office of Government Ethics. CNBC identified them as Kevin Hassett, Andrea Lucas and Keith Sonderling, and pointed out that all three are Trump appointees who report to the man who will make the final call.

The hearing is set for Nov. 5 at the White House, two days after the midterm elections, NBC News reported. The memo caps it at four hours, closes it to the public and requires a transcript. Cook “shall appear” and be examined. She may bring a lawyer, submit a written statement at least three days ahead, offer evidence and witness statements, and file a written follow-up by Nov. 10. Justice Department lawyers may do some of the questioning, and the panel must show her the evidence it is weighing before the hearing.

One more date matters. The Justice Department and Cook's lawyers owe a federal judge in Washington a report on Nov. 6, the day after the hearing, on how they want to proceed with her original lawsuit, Bloomberg Law reported.

How a mortgage form became a Supreme Court case

The case began last year, when Bill Pulte, a senior administration official, claimed Cook made false statements on mortgage documents for two properties before she joined the Fed, CBS News reported. Trump moved to fire her. Federal law lets a president remove a Fed governor only “for cause,” and Cook sued.

In June, the Supreme Court ruled 5-4 that she could keep serving while her challenge goes on, because she had not been given notice and a chance to answer the charges before she was fired. Roberts was clear that the bar is low: a governor is not “entitled to an audience with the President or a fullblown judicial trial,” and the chance to respond “may” be had on written materials only.

The White House sent Cook a letter in August laying out the claims and setting a deadline to respond. She answered that she has “never committed mortgage fraud.”

Her lawyers say yes, with doubts

Cook's attorneys, Abbe Lowell and Norm Eisen, said she “welcomes the opportunity to present the facts so she can clear her name and demonstrate there is no legal basis to fire her.” In the same statement, they said the president's “repeated statements that he has already decided to fire Governor Cook” leave them with “grave doubts that this ‘hearing’ is a legitimate one that would conform to the law.” They added that they are talking with the White House about whether the process “has a possibility of being a genuine one and not simply a box checking exercise.”

There is a trap in the fine print, too. The memo lets Justice Department personnel question Cook, but it does not say whether her answers could be used against her in a later criminal case, CNBC reported. If her lawyers seek immunity or she invokes the Fifth Amendment, that is no admission of guilt, though it would surely be portrayed as one.

Fair questions on both sides of the table

Start with the part conservatives have been saying for a year. If a Hoosier homebuyer fibbed on a loan application, nobody would call it a political matter. A Fed governor helps steer the interest rates behind every mortgage in this state. Whether one of them told the truth on her own mortgage paperwork is a legitimate question, and the public is owed a straight answer to it.

Now the part a government-skeptic should not wave away. The president who already tried once to fire Cook picked the three people who will decide whether he has cause. The room will be closed. Two of the three run agencies with no connection to mortgages or monetary policy. And the date guarantees no voter will hear a word of it before casting a ballot. A panel this one-sided can reach the right answer, but it will have a hard time convincing anyone who did not already agree.

The memo does not set a date for releasing the transcript. Its findings are not the last word either: the Supreme Court has said courts may review a president's finding of cause, and CNBC expects any firing to land in front of the justices again, which could take months. The Fed referred questions to Cook's lawyers, and Chairman Kevin Warsh has said the Fed will follow the Supreme Court's ruling, the network reported. The Washington Post reported her lawyers are still weighing whether she will appear.

In the meantime, Cook is expected to vote at the Fed's Oct. 28 interest-rate meeting, more than a week before anyone asks her a single question under the president's roof. The transcript, whenever it comes, should be released in full. Hoosiers whose mortgage and loan rates move with that board's decisions have every right to read it.

Written by Hoosiers, for Hoosiers.