The following is a lightly edited transcript of the September 9 episode of the
Daily Blast podcast. Listen to it here.
Greg Sargent: This is The Daily Blast from The New Republic, produced and presented by the DSR Network. I’m your host, Greg Sargent.
There’s been an amusing turn in the saga involving President Trump’s efforts to unleash the Justice Department against his enemies. Trump has been relying on his flunkies to manufacture allegations of mortgage fraud against his foes, particularly against Federal Reserve Governor Lisa Cook, which then formed the basis for referrals to DOJ. The whole thing’s a big scam. Now, news organizations have blown big holes in that effort. And meanwhile, a new poll shows that large majorities are against Trump interfering with the Fed, suggesting they don’t buy for a second any of the tricks he’s using to try to target Lisa Cook. All this is another example of Trump using authoritarian tactics that threaten to become terrible abuses of power, yet also show what an utter clown show some of this has truly become. We’re talking about all this with Matt Ford, who writes about legal affairs as staff writer for The New Republic. Matt, good to have you on.
Matt Ford: Thanks for having me. It’s good to be here.
Sargent: So Trump is trying to hijack the Federal Reserve, and his underling, William Pulte, who’s head of the Federal Housing Finance Agency, went and “found proof” that Fed Governor Lisa Cook committed mortgage fraud. That’s based on declaring numerous residences primary. She denies it, and the courts will get to the bottom of that. But here’s the bottom line: Trump’s allies in the government are rummaging through the mortgages of his enemies to target them. Matt, by itself, that’s an extremely corrupt act. Can you talk about that?
Matt Ford: Sure. It’s corrupt because it’s clearly serving the president’s own personal political goals. There’s no real policy interest here in pursuing this because it appears to be—I wouldn’t like to say common, but not uncommon, which suggests that this smacks of a selective prosecution. There’s also an element of vindictiveness here since Trump has been accused far more credibly of manipulating his own asset prices and engaging in all sorts of shady behavior with regard to his own real estate dealings. That’s what got him in trouble with the New York attorney general’s office, for example. Pulte has also tried to bring similar allegations against New York Attorney General Letitia James, saying that she has engaged in this as well. There’s clearly a vindictive element here in what’s going on, and it smacks of selective prosecution.
Greg Sargent: And Senator Adam Schiff.
Matt Ford: And Senator Adam Schiff, his antagonist on the House Judiciary Committee during his first term. It’s essentially seeing a bunch of people cross the street and only picking out a few people for jaywalking. This isn’t to say that people should engage in anything unscrupulous on their mortgages, but that Trump doesn’t really deserve the benefit of the doubt here. And that’s an important factor when we consider the ramifications of him firing her from the Fed.
Greg Sargent: Right. And here’s where the story gets funny. ProPublica found that three of Trump’s own officials have multiple primary residence mortgages. We’re talking about Labor Secretary Lori Chavez-DeRemer, Transportation Secretary Sean Duffy, and EPA Administrator Lee Zeldin. And it gets even better, Matt. Reuters reports that none other than William Pulte—that’s the head of the Federal Housing Finance Agency, the guy who’s engineering the whole scam for Trump—has relatives who also have done something similar with multiple primary residences, in particular Pulte’s father and stepmother. Matt, this is buffoonery on an epic scale. What do you make of it?
Ford: Well, I make of it that this is something that is probably not best fixed through prosecution. It sounds to me like there either needs to be more regulatory clarity here, or there seems to be some misunderstanding about the law for something to be this widespread. What the proper solution is is not just singling out these people for prosecution, especially if it implicates your own family members, and using it as a pretext to accomplish some other presidential goal. I understand that a lot of Trump officials want to make Trump happy, but this is a really shady and corrupt way of going about doing it.
Sargent: Yeah, and I think we should underscore just how shady and corrupt it is. It essentially involves William Pulte going out and looking through the mortgages of Trump’s top-tier enemies—just singling out Trump’s top-tier enemies—and ordering somebody at FHFA to go look at their mortgages. That’s what they’re doing. It’s absolutely outrageous. And as funny as a lot of this is, we shouldn’t lose sight of how corrupt it is.
Ford: And it evokes Watergate. This wasn’t the central part of Watergate, but one of the things that emerged from that investigation, from the close scrutiny of the Nixon administration, was that Nixon and his allies were combing through IRS records to subject his political enemies and adversaries and people he just didn’t like to greater scrutiny. That was widely seen as an abuse of power, and I believe that’s where some of the privacy restrictions on taxpayer information now come from. So mortgages and anything that involves close financial information—unless you have some rational predicate for an investigation, it’s inappropriate. It really is.
Sargent: Yeah, it certainly is. And CBS had this new poll that I think underscores public rejection of these tactics. It was brutal for Trump. Large majorities oppose his deployment of the National Guard to cities. Sixty-two percent opposes tariffs. The poll also asked about Trump’s assault on the Fed. And this didn’t get attention, but listen to this: 68 percent say they want the Fed to make decisions independently from Trump. Seventy percent say Trump shouldn’t replace Fed members who disagree with him. Matt, I find that pleasantly surprising. I read that as a statement of fundamental distrust of Trump and his intentions. What do you think?
Ford: Well, I think it really speaks to how Americans view the Fed. They value its expertise. They value its independence. Given the immense powers it wields over the American economy, over the American financial system, over capital markets, I don’t blame Americans at all for being hesitant to see any president—let alone this one—get more involved in their workings. And I think that’s something that Congress recognized when they established the Federal Reserve almost a century ago. They wanted it to be independent. They wanted to ensure the presidents could not interfere with its workings to suit their own narrow political goals. They wanted it to act on behalf of all Americans. And to that end, they gave it a variety of structural features to keep it insulated both from Congress and from the White House—one of which was that members of the Federal Reserve Board of Governors couldn’t be fired except for cause. And that was for things like neglect, malfeasance, or serious misconduct. That’s not the exact quotation, but that’s roughly what they were looking to set the bar for for removal.
Sargent: Right. And just to underscore your point, for cause means in essence—or it has come to mean—very serious malfeasance or misconduct, which is basically another way of saying that if the president is going to remove a Fed member, they have to have an actual reason for it related to their conduct on the job. It can’t just be something Trump pulls out of his damn ass. And that’s what he’s doing on every front: pulling pretexts out of his ass to do whatever he wants. And here’s a really clear example of this. It’s like William Pulte goes out there and he tweets something like, Ooh, I’m just about to drop a new one on mortgage fraud. It’s almost like they’re laughing. They’re almost snickering at us when they do this kind of thing. They act as if people are just going to get utterly fooled into thinking these are real reasons for the firing. I find the whole thing just disgusting on some level.
Ford: Well, the thing is obviously pretextual. We’ve known for years. Even back during his first term, he was butting heads with other members of the Federal Reserve, with Jay Powell, the chairman of the Board of Governors. He wanted him to lower interest rates, and Powell was not really ready to do so. He was concerned about inflation. That simmered when obviously he had to take drastic steps on interest rates during the pandemic, but Trump has always shown a sharp interest in seizing control of the Fed and taking a more dovish approach to monetary policy. And his actions so far this term have indicated that. The fact that he has found a pretext for it is unsurprising.
I want to also point out—you mentioned the for-cause thing, and I think it’s important to specify here [that] the base assumption for top-level federal officials is that the president can fire them at will. That was loosely expected to be the understanding at the time of the founding. At the same time, without getting into the whole historical spectrum here of evidence, there are long-standing signs that there were times that Congress could insulate certain government officials from dismissal. And the Federal Reserve is the apex of this because it is such a unique institution. It’s not just another regulatory agency. It’s not just another multimember board that goes after antitrust violations or securities fraud. Not that those aren’t important, but controlling the nation’s monetary supply has dire implications for every American if it’s not done properly. And so that’s why Congress took these additional steps, and that’s why for-cause protection can’t just be something you can defeat by merely making a vague accusation. It needs to be something more than just whatever the president says. Otherwise, it’s no different from at-will removal.
Sargent: Right. And what Trump and his underlings are trying to establish is something close to an absolute power to remove people.
Ford: That’s right. And I think that stems from the unitary executive doctrine. That’s this view that has cropped up in conservative legal circles for years: that the president has absolute and untrammeled authority over the executive branch. Now, the lived experience of the past century, if not longer, has been that these powers can sometimes merge and meld. A lot of the federal regulatory agencies like the SEC, the FTC—they represent a combination of legislative and executive power. The Supreme Court, thanks to the conservative majority, has tried to cleave that apart. They want all of that power under one branch or under another, and they have sought to maximize presidential power whenever possible to pursue that end.
Sargent: Well, I want to get at something deeper about this and broader. I think there’s a tendency out there among media figures and, unfortunately, among some Democrats to presume in advance that if Trump assaults a governing institution, he’ll have broad public support. There’s a presumption that he’s tapping into some deep and very real sentiment of dislike of the bureaucracy or suspicion of our institutions. The deeper underlying idea is that there’s really a genuine and authentic populist upwelling among the people that will lead them to support this kind of thing by Trump. But we’re not seeing that here. You see large majorities saying, Let’s keep these institutions independent. They’re sacrosanct, and Trump should keep his hands the hell off of them. Would you have expected that?
Ford: I would expect it in the sense of the Fed, but with a caveat. I am heartened that a large majority of Americans feel that way. But I think that certain Americans’ voices will carry more weight, both with the administration and with the court, on this—and that’s wealthy Americans. That’s Americans who are involved in finance, who are involved in investments, who are involved in banking, and who make decisions on that front, who know intimately the dangers that come with having a central bank—we’ll set aside the preciseness of the Federal Reserve’s structure, and we’ll just call it a central bank for simplicity’s sake—that is only obedient to immediate political authority. One of the things that Congress sought to do was balance the idea that institutions should be representative and accountable to the people while also maintaining that separation, so they have staggered terms. No president should theoretically be able to appoint a majority of governors to the board at any one time. They have these removal protections. They have other insulatory measures coupled with them. And I think those are going to be important not just to ordinary Americans—they certainly should be to ordinary Americans—but to donors, to CEOs, to business leaders, to all sorts of people who know intimately how these structures function and how important their independence is to function well in the economy.
Sargent: Well, you brought up the Supreme Court. Can I ask: Where do you see this all going? Let me ask it like this. We should acknowledge that as buffoonish as all this is, Trump controls the Justice Department apparently. And they’re doing this, as we said, with three of Trump’s enemies—Lisa Cook, Senator Adam Schiff, and New York Attorney General Letitia James. And in all these cases, referrals have been made to the Justice Department. DOJ is apparently investigating in the Cook and Schiff cases. Where do you expect all this to go? What comes before the Supreme Court exactly? Is it the effort to fire Cook, and what happens?
Ford: Well, that’s a really good question, and it’s going to be one that we’re going to probably have an answer on fairly soon. Cook has filed a lawsuit challenging her apparent removal. I don’t think we have very good information from within the Fed whether she is still performing her duties or not. My understanding is that she is, but I don’t think we have solid reporting on that yet. The Fed certainly isn’t publicly announcing it; they were very elliptical in their own statement on the matter. But they are going to go to a district court, and they are going to try to get an injunction—Cook is. And what she’s going to do is argue that, Look, you either need—she said this in her lawsuit—Humphrey’s Executor completely gone (Humphrey’s Executor was the Supreme Court case in 1935 that upheld these protections), but you also need to get past Trump v. Wilcox. That was a decision earlier this year—a shadow-docket decision—where the court said, Hey, we will allow the president, I’m paraphrasing obviously, the president can fire members of the National Labor Relations Board, but we’re just going to throw out that he can’t fire members of the Federal Reserve, that there’s different factors at play here.
And the court doesn’t say he can’t outright, but they strongly sent the signal—in the way that only the court can—that that would be their red line. The problem here for the court, and I think this is a problem that’s a genuine legal question that’s going to crop up, is: What does it mean to meet that threshold? What sort of protections apply? Because clearly it needs to be surmountable in some sense. Congress envisioned a threshold of wrongdoing to be possible for removal. At the same time, this clearly, at least in my view, does not meet that threshold. I think that the other part of Cook’s motion or lawsuit that was important was that Trump denied her due process. And the idea [is] that in order to be removed from this position, she had to receive notice in advance (she received no such notice); she had to be given an opportunity to challenge it, and there had to be some process that was undertaken to assess the validity of the claims. Because like I said earlier, if the president can simply say, This person did that, and therefore they’re removed, without any further scrutiny or process, there is not really any protection in substance. And that can’t be what Congress intended.
Sargent: Matt, just to jump in here, basically the core question is whether Trump can essentially say something like, Well, Lisa Cook, you didn’t wear a MAGA hat at the last Fed board meeting, and I’m saying that that’s cause for removal. Right?
Ford: Well, they obviously wouldn’t let that happen.
Sargent: Yes, I know. And so the question is, How much discretion does Trump have in saying what for cause means? Isn’t that the essence of this?
Ford: Yes. And that’s what I was getting to. I think the essence of it is what mechanism does this actually look like? What sort of process does she receive? And that’s what the court’s going to decide. They may decide that this doesn’t meet it at a minimum at all—a mere allegation. They might say, You need a conviction, you need an actual indictment, you need something with more substance than this. Or they may say that some internal process needs to be done. I think that’s going to be the really important question.
The mystery that I have—the one question I’m not sure what they’re going to do—is whether they’re going to let her continue to serve in office while this unfolds. Because if they don’t, and this has been a problem with the other cases, they have erred on the side that letting these people serve in their positions after Trump has tried to remove them is an injury in and of itself to the government. We won’t get into how ridiculous that is; that’s just what the court has said. The injury in this case would mean that if they apply the precedents they’ve already used this term, Cook should not be able to exercise her functions as a governor of the board in upcoming hearings, [Federal Open Market Committee] meetings, interest rate meetings—all the meetings and regulatory moves that they make. The court may say she cannot participate in them while this litigation is ongoing. That’s going to be a really interesting test as to whether or not they reweigh the balancing of equities, given what they’ve said about the Fed’s unique structure, in her favor.
Sargent: In short, the whole thing is completely ridiculous, but with this Supreme Court, you just never know. Matt Ford, thanks for that, man. You really explained a lot to us. We really appreciate it.
Ford: Thank you so much. Thanks for having me.