Trump vs. Federal Reserve court battle begins, heated debate over whether the dismissal is "justified," board members claim tweets cannot be used as a reason

On August 29, Friday, Eastern Time, a hearing was held in the U.S. District Court in Washington, D.C. regarding the lawsuit filed by Federal Reserve Governor Cook against President Trump for his dismissal. This means that the court battle will determine whether Trump can unprecedentedly control the Federal Reserve's monetary decisions.

The plaintiff, Cook, and the defendant's lawyers, led by Trump, argued in court about whether the reasons for Trump's dismissal were "justified."

In court documents submitted before the hearing, the U.S. Department of Justice stated that Congress has granted the president discretion, and the court should respect Trump's judgment on whether there is sufficient "just cause" to dismiss Cook. In other words, the government believes that defining the reasons is the president's privilege, and the court has no authority to review it. As long as the president determines that the allegations of misconduct constitute reasonable grounds for her dismissal, that is sufficient.

Cook's lawyer, Abbe Lowell, countered that the allegations posted by Trump administration officials on social media cannot be used as grounds for dismissal, calling it an "obvious smear campaign" with political motives behind the accusations against Cook. The allegations are unverified and did not give Cook a chance to refute them. Even if the alleged fraudulent behavior were true, it occurred before she took office as a governor and is insufficient to justify her dismissal.

According to media reports, after Trump announced Cook's dismissal on Monday evening, Cook still retained access to the Federal Reserve office and the use of equipment, and it is unclear whether she has returned to her office in person.

The Federal Reserve stated in the submitted court documents that it would not comment on Cook's request to temporarily block her dismissal but hopes the judge will "swiftly rule" to resolve the dispute.

Judge Cobb did not make any ruling after the hearing; she provided both lawyers with the opportunity to submit supplementary materials and did not set any specific deadlines except for requiring Cook's lawyer to submit documents by next Tuesday.

If Trump successfully dismisses Cook and nominates a new governor to replace her, his nominee will hold a majority in the seven-member Federal Reserve Board, totaling four members, giving him substantial control over interest rate decisions. Wall Street Journal mentioned that Trump stated on Tuesday that after replacing Cook, the majority of the Federal Reserve Board members would support his willingness to significantly cut interest rates.

Department of Justice Argument: The President Has Discretionary Authority to Dismiss

The Trump administration insists that Cook's alleged mortgage fraud before joining the Federal Reserve constitutes "just cause" for her dismissal and maintains that the unique status of the Federal Reserve, while important, does not affect the president's discretionary authority to determine the grounds for dismissal.

The Department of Justice stated in court documents that defining what constitutes "just cause" is the president's privilege, and the court has no authority to review it. The document states:

"Dismissal based on 'just cause' falls under a broad standard, and Congress has granted the president discretionary authority," even if that decision is subject to judicial review — which over a century of case law indicates is not the case — the review must highly respect the president's constitutional power over principal officials to avoid interfering with presidential authority."

The document argues that Cook's request for the court to issue a temporary restraining order (TRO) to prevent her dismissal should be dismissed because her claim that Trump illegally dismissed her without necessary "just cause" is "extremely unlikely to succeed on the merits." The Department of Justice's lawyer pointed out in the documents that Cook has "not even provided an explanation" for the mortgage allegations. The Department of Justice believes that if there is a reasonable explanation for the mortgage discrepancies, "we should have heard it by now."

During the hearing, when Judge Jia Cobb asked whether the president could invoke any reason to dismiss government officials protected by the "for cause" clause, as long as the reason was not based on policy disagreements, even the most "trivial" reasons, DOJ lawyer Yaakov Roth stated that the reason for dismissal needs to question a person's suitability or ability to hold the position.

When Cobb questioned whether notifying the allegations through social media posts met due process requirements, Roth stated that it "absolutely meets" the requirements.

Cobb asked whether Cook received proper notice regarding the allegations against her, to which Roth replied that although there was no direct contact with her before her dismissal, she did receive "actual notice" because she "certainly knew" about the allegations.

Roth acknowledged that Cook was not aware that she had only five days to respond. This refers to the fact that there was only a five-day gap between the allegations of mortgage fraud against her by Trump administration officials and her dismissal. Roth stated that the established reason for Cook's dismissal was neither an excuse nor based on purposes not mentioned by Trump in the dismissal statement.

Cook's Lawyer Claims Motive Behind Fraud Allegations is Obvious, Becoming Trump's "Preferred Weapon"

Cook's lawyer, Lowell, strongly criticized the reasons for her dismissal in court, stating, "You cannot use Director Pulte's crazy midnight tweets as a reason." He was referring to the tweets by Bill Pulte, the Federal Housing Finance Agency director appointed by Trump, who accused Cook of mortgage fraud on social media.

In his statement, Lowell said that Cook faced a "smear campaign" aimed at tarnishing her reputation, noting that in the past two days, Cook had been named over 30 times on social media, demanding her dismissal before verifying the evidence. "These vague and baseless allegations" have nothing to do with her responsibilities at the Federal Reserve and "should never be a reason to remove her from the Federal Reserve Board."

Lowell stated that Cook has suffered "irreparable harm." Such harm is one of the necessary conditions for filing an emergency lawsuit.

Lowell believes that Trump's public criticism of the Federal Reserve and Cook demonstrates his true motive—removing a Federal Reserve governor who refused to lower interest rates according to his wishes. He said, "Policy disagreements do not constitute grounds for dismissal," and added that the fraud allegations "have become the Trump administration's preferred weapon" to remove officials who obstruct its agenda.

Lowell claimed that Cook did not receive the necessary due process in facing the allegations. He pointed out that Cook had the right to receive prior notice when accused of misconduct and to have the opportunity to rebut.

Lowell stated that under U.S. law, these unverified allegations are insufficient to constitute "grounds" for Trump to dismiss her. The relevant allegations were made in social media posts, and she was not given an opportunity to respond, which is inadequate for her dismissal.

Cook's side emphasized that even if the allegations were true, the related actions occurred before she received Senate confirmation, and even if she did anything, it did not reach the level of being "for cause" for dismissal. Moreover, any so-called discrepancies in the allegations of fraud could be the result of "clerical errors."

Federal Reserve's Position: Waiting for Court Ruling

The Federal Reserve has taken a neutral stance in court documents, stating that it will "follow any orders issued by the court." At the same time, the Fed has requested the judge to make a "swift ruling" on this unprecedented dispute.

According to Cook's lawyer, the Federal Reserve does not intend to "take any action today" and will not act until the court ruling. This effectively maintains the status quo—Cook continues to hold his position as a governor.

In this case, the Federal Reserve is listed as a defendant, merely to prevent it from potentially seeking to enforce Trump's desire to dismiss Cook at some point.

Judge's Attitude: The Case is Unprecedentedly Complex

Judge Cobb stated at the hearing, "This case clearly raises some significant issues that may be unprecedented, especially concerning this (Federal Reserve) board."

Cobb expressed concerns about the arguments from both the prosecution and defense. She noted that Trump has explicitly indicated a desire to gain a majority on the Federal Reserve board and then look for reasons to dismiss, which she finds "troubling." She also questioned whether Cook has truly suffered "irreparable harm" that necessitates urgent court action.

The hearing lasted about two hours, during which Cobb posed sharp questions to both sides. Cobb has requested Cook's lawyer to submit response documents by next Tuesday. Commentators believe this indicates she will not make a ruling before next Tuesday.

Media Observation: The Case May Reach the Supreme Court

According to media reporters, the conflict arising from Cook's dismissal is likely to be sent to the Supreme Court for review by the end of this year. Earlier this year, the Supreme Court allowed Trump to temporarily dismiss members of the National Labor Relations Board and the Performance Management Protection Board, setting an important precedent for Cook's case.

A legal reporter who witnessed the hearing pointed out that although Judge Cobb did not explicitly state her position, she expressed unease about how the Trump administration is handling the matter, particularly regarding the administration's belief that social media posts constitute due process and Trump's ongoing dissatisfaction with the Federal Reserve's refusal to cut interest rates being unrelated to this case.

The reporter believes that Cook and her lawyer need to persuade the judge that while this year's cases show the Supreme Court supporting Trump's dismissal of other senior officials, these records and other precedents do not rule out the possibility of the judge deciding to block Trump in this case.

Traditionally, "just cause" has been interpreted as misconduct or improper behavior, but the exact definition of this meaning may remain contentious until it reaches the Supreme Court