Banking and Finance Law Daily Wrap Up, FEDERAL RESERVE SYSTEM—Former officials submit amicus brief in Fed governor ouster appeal, (Sep 26, 2025)

By Shashi Kant, BALLB, LLM.

Fed governor Cook filed an opposition brief arguing mortgage fraud allegations are “flimsy,” and several former Fed chairs warn that Supreme Court intervention risks economic chaos.

Federal Reserve Governor Lisa Cook filed an opposition brief with the U.S. Supreme Court on Sept. 25, 2025, arguing that President Trump’s emergency stay application seeks to “eviscerate the independence of the Fed based on “flimsy, unproven allegations of pre-office wrongdoing.” Simultaneously, a coalition of former Treasury Secretaries, Fed officials, and prominent economists submitted an amicus brief warning that removing Cook would threaten the Fed’s independence and economic stability, arguing that “maintaining the independence of the Federal Reserve is essential for a healthy economy.”

Background. The dispute originated on Aug. 25, 2025, when President Trump posted a letter declaring Cook “hereby removed” from the Fed Board of Governors, citing allegations that she misrepresented her primary residence in mortgage documents signed in 2021, before her appointment to the Fed (see Banking and Finance Law Daily, Aug. 26, 2025). The Federal Housing Finance Agency had referred Cook to the Department of Justice for potential prosecution related to allegedly signing inconsistent mortgage agreements for properties in Michigan and Georgia.

Cook filed suit on Aug. 28, 2025, alleging violations of the Federal Reserve Act and the Fifth Amendment. On Sept. 9, 2025, District Judge Jia M. Cobb issued a preliminary injunction blocking Cook’s removal and enjoining Fed Chair Jerome Powell and the Board of Governors from treating Cook as removed (see Banking and Finance Law Daily, Sept. 10, 2025). Judge Cobb ruled that the President’s action likely violated the Federal Reserve Act’s “for cause” requirement because it concerned pre-appointment conduct rather than in-office performance.

The Trump administration appealed to the D.C. Circuit and sought an emergency stay. On September 15, the D.C. Circuit denied the government’s stay motion in a divided decision. Judge Garcia, writing for the majority, emphasized due process concerns and found that Cook likely has a protected property interest in her position due to the for-cause removal protection (Banking and Finance Law Daily, Sept. 12, 2025).

Amicus Brief coalition. An amicus brief filed September 25th by former Fed Chairs Ben Bernanke, Alan Greenspan, and Janet Yellen, along with former Treasury Secretaries Timothy Geithner, Jacob Lew, Henry Paulson, Robert Rubin, and Lawrence Summers, argued that Fed independence serves as a “nominal anchor” providing public confidence in low inflation. The coalition cited “more than three decades of empirical research” showing that “the more independent a central bank is, on average, the lower and more stable inflation will be without slowing growth or increasing average unemployment rates.” The brief provided historical context, noting that President Nixon’s pressure on Fed Chair Arthur Burns “enabled a decade of high and volatile inflation,” and cited Turkey as a recent example where President Erdogan’s interference resulted in inflation reaching 85 percent. The former officials emphasized that only 12 nations worldwide allow the removal of central bank board members at executive discretion, listing countries such as Bangladesh, China, Iran, and Vietnam.

Cook’s supreme court opposition arguments. In her opposition brief, Cook argued that the President’s stay application would “dramatically alter the status quo, ignore centuries of history, and transform the Federal Reserve into a body subservient to the President’s will.” Cook’s legal team, led by counsel Abbe David Lowell, contended that the allegations were “conveniently timed following the President’s criticism of the Board’s policy decisions.”

Cook’s brief emphasized that fundamental flaws in the “mortgage fraud” allegations have emerged, stating that reports confirm Cook properly declared her Michigan home as her principal residence and accurately described the Georgia property as a “vacation home.” The opposition argued these facts demonstrate the allegations are not “fraud,” “deceitful,” “potentially criminal,” or “gross negligence.”

The brief challenged the President’s interpretation of “for cause” removal authority, arguing that when Congress restricts removal except “for cause,” that provision allows removal only for existing causes for presidential removal of executive officers at the time the provision was enacted. Cook argued that in 1913 and 1935, the only recognized causes were inefficiency, neglect, or malfeasance in office, none of which apply to alleged pre-office conduct.

Cook emphasized that throughout the Federal Reserve’s 111-year history, no president has attempted to remove a Federal Reserve governor, suggesting “strong reason to believe that the power was thought not to exist.” The brief argued the President’s interpretation would give him “virtual carte blanche authority to fire any governor at any time.”

Due process and procedural violations. Cook’s opposition extensively addressed due process violations, arguing she was entitled to notice and a hearing prior to removal under both statutory and constitutional law. The brief cited Supreme Court precedents stating that “where causes of removal are specified by Constitution or statute, as also where the term of office is for a fixed period, notice and hearing are essential.”

Cook emphasized that she learned of her removal only through the President’s public posting, constituting a likely violation of the Fifth Amendment’s Due Process Clause. The opposition argued that Cook has a property interest in her fourteen-year term and could not be deprived without proper process.

Fed’s institutional design. Both briefs emphasized the Federal Reserve’s distinctive structure designed by Congress to ensure independence. Cook’s opposition noted that Congress designed the Fed’s structure to “insulate monetary policy from political influence by granting the Board independent funding, exemption from certain oversight mechanisms, and direct authority to present legislative testimony.”

Market stability and economic concerns. Both filings raised concerns about financial market stability and economic disruption. Cook’s opposition argued that granting a stay “would signal to the financial markets that the Federal Reserve no longer enjoys its traditional independence, risking chaos and disruption.” The brief noted that Cook has continued performing her duties throughout litigation, including participating in the Federal Open Market Committee meeting and voting on interest rates.

Government’s competing arguments. The Trump administration’s stay application, which was filed September 19, argued that the lower court decisions “flout many strands of this Court’s precedents, from removal to due process to the equities.” Solicitor General D. John Sauer contended that Cook lacks a Fifth Amendment property interest in her continued service as a Federal Reserve Governor. The Separation of Powers Clinic at The Catholic University of America filed an amicus brief supporting the government, arguing that the “strong default presumption under Article II is that the President can freely remove officials who exercise any executive power” (Banking and Finance Law Daily, Sept. 19, 2025).

Attorneys: D. John Sauer, U.S. Department of Justice, for Donald J. Trump. Abbe David Lowell (Lowell & Associates, PLLC) for Lisa D. Cook.

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