Trump's Second Attempts at Birthright Citizenship and Firing Fed's Lisa Cook

0:00Bloomberg Green returns to New York during Climate Week, September 22nd and 23rd, bringing together industry leaders, policymakers and climate innovators to explore solutions for a more resilient, future-ready world. Powered by Bloomberg's trusted journalism and data-driven insights, discover how climate is reshaping business, technology, policy and the economy. Presenting sponsor, Hitachi Energy, official airline, Alaska and Hawaiian Airlines. Learn more at BloombergLive.com slash Green NY Radio. This is Bloomberg Law with June Grosso from Bloomberg Radio. It's another legal fight over the Fed's independence ahead as President Trump is threatening to fire Fed Governor Lisa Cook a second time.

0:48The Supreme Court in a 5-4 decision in June allowed Cook to remain in her job while she fought Trump's bid to oust her over mortgage fraud accusations, faulting the president for not giving her notice and a chance to be heard before trying to remove her. Now the Trump administration has sent Cook a letter saying Trump is considering removing her and giving her until August 26th to respond to the same allegations of mortgage fraud. Joining me is constitutional law expert Harold Krent, a professor at the Chicago-Kent College of Law. In its decision, the Supreme Court didn't specifically say what notice and comment to Cook was required.

1:31The Trump administration is giving her three weeks to respond. Do you think that meets the procedural protections the court envisioned? So a cornerstone of due process under the Supreme Court's rulings for the past generation have been you have notice and opportunity to be heard. The notice has to be reprise you of what the charges are against you, the opportunity to be heard can be very flexible, can be informal. And so I think in this respect, President Trump is following the marching orders from the court and giving an informal opportunity for Lisa Cook to respond to the charges. In fact, she cooked up the books with respect to the mortgage.

2:11The real question, though, is what's going to happen afterward, because she is going to respond. And then he is extremely likely to ignore the responses and say that he has cause for her dismissal and then dismiss her. Obviously, Ms. Koch will go to court and then the court has to make a decision as to whether to reinstate her pending a more complete trial on the merits. What does cause mean? Does cause equal the fact that this was a mortgage fraud or was it not a mortgage fraud? Sort of two issues there, you know, whether cause can relate to something that's not related to conduct in office. And obviously the mortgage fraud was way before she became a reserve officer.

3:00And the other issue is, you know, was it fraud at all? And so I think that the real issue here is not this notice and opportunity to heard. It's what's going to happen after Trump removes her. She's going to run to court and the court's going to have to make a balance about likelihood of success on the merits, the awkwardness of trying to force a president to deal with an officer whom the president has tried to remove. And it's going to be a very close case. So Cook can only be dismissed for cause. But in his opinion, the Chief Justice didn't make clear what for cause actually is, but he said he thought the administration's definition was too lenient and the defense's definition was too stringent.

3:52I mean, first of all, there's factual disagreement as to whether what she did on her mortgage application constitutes fraud or nothing at all. So that's one issue here. And then the question is, as you suggest, is how big of an error prior to somebody being appointed equals cost. I mean, in my mind, I am somewhat empathetic to President Trump's position in this score. If someone committed a murder and then it becomes uncovered before they're in office, that might be reason to remove them. Or if somebody even commits some kind of serious financial fraud and then is appointed to the Fed, if that financial fraud is uncovered later, that might be cause to remove somebody because nobody's going to have faith in their sort of unbiased performance of the job.

4:40Here, it's more minor. It's well before she is appointed to the office. And so the courts now have this uncharted waters of deciding whether that kind of allegation would be sufficient to equal cause for removal. And there's not a really good signpost in the chief justice's opinion. But again, there's also a factual dispute. Is what she did fraud or not? There's a lot of allegations out there. It doesn't mean that she did anything wrong whatsoever. The Justice Department was sent a referral for prosecution by Bill Pulte, who was then what, the FHFA director. And they opened a criminal investigation into whether she committed mortgage fraud, but they've never charged her with anything.

5:23Now, maybe Todd Blanche now, as AG, will please the president and charge her. But where does it fit in that they haven't charged her? I don't think that's directly relevant here, because I think what the president would say is we don't have to have a criminal investigation in order to equal cause. We just have to be able to be convinced that misconduct occurred, which would impair her ability to effectively discharge the responsibilities of the office. You can decouple a criminal investigation or criminal charges with misconduct, sufficient misconduct to constitute cause for removal. So I think that the president is clear on that score.

6:00But again, there's a whole big factual dispute that courts would have to resolve whether what she did does constitute fraud. And second, whether the fraud is significant enough to constitute cause for her removal some five to 10 years later from the odds. Would she be entitled to a jury trial then on that? We've never seen this happen before, so we don't know if there would be a jury trial. I don't think there would be a jury trial, but there would have to be a hearing and the court would have to get evidence and then make a decision, again, what factually happened and whether whatever happened factually, whether that constitutes cause for removal.

6:42And what the court has never held, whether you can have someone remain in office while these charges are being adjudicated. Now, her term, Lisa Cook's term, goes, I think, 2038. So she could be reinstated even if there is a six-month delay in a hearing. But on the other hand, will a court order that she remain in the office pending this hearing, whether it lasts six months, nine months, or is more expedited? So again, uncharted waters. And it's sort of amazing that the president just kept his vendetta going because this is just going to be more anguish, more headlines. And it really doesn't put the president in a very powerful light, but he wants to even escort.

7:32Well, she raised the allegation that this is a vindictive prosecution. They went after her, but also they tried to go after Jerome Powell. Jeanine Pirro, the U.S. attorney, has said that's not dead, even though, you know, a judge wouldn't even give her a subpoena for what she wanted from Powell. Part of her argument will be this is pretext, just as it was with Jerome Powell. And that will be factored in. But again, the real the first big legal question is, will a court order that she remain in office pending this hearing? And that's something that's not a simple question because it is really sort of undermining the president's authority to govern by forcing somebody to remain in office that the president doesn't want in the office.

8:22So that's going to be part of the calculus that the court is going to have to grapple with in deciding whether or not she can stay in office before hearing all of these charges, including the vindictive prosecution charges. She's going to have a very good argument given what Pulte has done in other contexts. I mean, is the president supposed to be working with the Fed board? Isn't the Fed board supposed to be independent? Is that the whole idea? Well, the Fed chair, as we know, does regulate banks, too. And the president has the ability to call officers who are protected from labor removal and jawbone them and talk about regulation strategy.

9:03and so this would be appropriate for the president to do so for part of it. And the question would be, again, whether the courts would say, because of this independence that the Supreme Court found with respect to the Fed, it's sort of a one-off, that whether it's too much of an intrusion into the president's power to order reinstatement pending the hearing. So we're going to see the reinstatement question, and then we're going to presumably have a hearing after the fact, to determine whether or not whether, again, is it vindictive prosecution? Did she commit fraud? Does the fraud constitute cause for a move?

9:40What do you think about the timing on this? It might go back up to the Supreme Court. It won't go directly to the Supreme Court. There's going to be a hearing somewhere first. It could be expedited. It probably will be. But again, as part of this, the courts are going to decide, reinstated or not, no matter whether it's an expired a hearing of three weeks, three months, or two years. And again, her term doesn't end. So at a minimum, the president won't be able to appoint a successor while this is pending. But the question is whether she can serve until this is resolved. So the president is forcing, once again, new legal issues and very complicated in a short period of time.

10:22And it may well end up being resolved by the Supreme Court, which usually takes time. Thanks so much for joining me, Hal. That's Professor Harold Krent of the Chicago-Kent College of Law. Coming up next on the Bloomberg Law Show, we'll turn to immigration issues. The president is trying a new tact on birthright citizenship after the Supreme Court found his first executive order restricting birthright citizenship to be unconstitutional. And the The Department of Homeland Security is hiring what are basically bounty hunters to track down immigrants who left the U.S. We'll tell you why. I'm June Grosso, and you're listening to Bloomberg.

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11:48I thought we were going to win it at the Supreme Court. Unfortunately, we had a bad decision, very unfair decision. Our country suffers because of it, and we're ending it a different way. Actually, about 35 countries, including Canada, Mexico, and Argentina, do offer unconditional birthright citizenship. But birthright citizenship has become a key rallying point in President Trump's second-term anti-immigration agenda. The Supreme Court, in a 6-3 decision, found Trump's first executive order restricting birthright citizenship to be unconstitutional. But Trump is trying again, signing a pair of executive orders aimed at denying birthright citizenship to certain people born in the U.S.

12:37Joining me is Leon Fresco, a partner at Holland & Knight. He was the head of the Office of Immigration Litigation during the Obama administration. Leon, let's start with a little review of what the Supreme Court decided about birthright citizenship in June. So the first executive order was in January 2025, which tried to bar citizenship for the children of undocumented immigrants or those here temporarily. So it said basically one parent needed to have a green card or a U.S. citizenship, a passport, birth certificate, whatever, to confer citizenship on a child born in the United States. And so the Supreme Court took up this issue and whether you want to say it was 5-4, 6-3, however you want to say it, depending on how you calculated the votes and concurrences and everything else, basically said this issue of birthright citizenship and the executive order didn't just conflict with a 1952 statute, but actually conflicted with the U.S.

13:43Constitution. that the Constitution says what it says, and no matter what intervening facts you have, that meant that you couldn't take away birthright citizenship vis-a-vis an executive order. You'd have to amend the Constitution to get rid of birthright citizenship. And so they didn't accept the argument that people who were here illegally were not subject to the jurisdiction of the United States. That was the government's argument, that you had to have some residency here in order to be subject to the jurisdiction of the United States. So what do these two orders do to get around the Supreme Court's decision?

14:23The Trump administration has been very upset about this. They're trying to figure out ways to continue on this issue of birthright citizenship. And so now they've tried to see, OK, can we issue an executive order that tries to fall within the court's recognized exceptions to birthright citizenship? So as an example, the number one exception is if you are the children of diplomats born in the United States, you are subject to the jurisdiction of the United States, because in that situation, those children have diplomatic immunity. And so when they're born here, they're not citizens of the United States.

15:01So the Trump administration is trying to figure out what kinds of people are analogous to children who are born to diplomats who are here in the United States. And so this is what they've come up with. Their new executive order says any children of ambassadors or any other embassy employees. But then they also have added employees of foreign governments present in any kind of official capacity. So sometimes you'll have like the Irish Tourism Bureau person who's here. And the point would be if that Irish Tourism Bureau person has a child while they're in the United States, they would say, no, that child does not get birthright citizenship.

15:42They've also added employees of international organizations, so like the UN, the World Bank, the IMF, etc., that if any of those people have children who are born in the United States, they would not get birthright citizenship. And then they've added individuals who are the children of alien enemies under federal law and people who've engaged in birth tourism and also children born in U.S. territories or territorial waters where citizenship is not conferred by federal statute. So that's what the executive order did. And so really, this is going to be a little bit tougher because it's not so easy to find people withstanding here and plaintiffs.

16:25So someone's going to need to actually be in this group and is going to actually have to apply for a passport and is actually going to have to be refused a passport in order to move forward and file a lawsuit here. So this is not going to be so simple. And we'll try to see who would have said that they would have previously gotten citizenship under pre-executive order types of interpretations of the law that now suddenly can't get a passport. And then only then will we see if this new Supreme Court decision actually applies to these individuals or not. Is this just for show? I mean, how many people would these new categories cover that aren't covered already?

17:12That's really what we're going to have to figure out is I can't really tell how many people will fall within the ambit of this and how exactly these cases will make it to the court. Because yes, theoretically, you could have some organization try to file the case. But if the organization can't identify specific people who are actually affected by this, I don't think it's going to be something that actually survives a standing claim. So you're going to need to find one or two people here who would say, look, I am now affected by this. I wasn't affected by this before. And I tried to apply for a passport and I didn't get it.

17:51and only then are we going to see the litigation. I mean, I'm sure people will try to file it before then, but at the end of the day, I think that this is going to be tougher here because we're going to have to see. Now, on the birth tourism one, again, it's the same concept here where if the government actually tries to say, well, you came because of birth tourism, so we're not giving you your passport. It's tough to say preemptively that you're covered under this because you wouldn't want to identify yourself as someone who was covered under this. So you're going to have to wait till the government actually designates you as someone who was born under birth tourism, which is why they think they're not going to give you a passport here.

18:33So again, hard to tell, and we're just going to have to wait and see for plaintiffs to actually emerge because they're actually being denied U.S. passports. It's already visa fraud, isn't it, to travel under the guise of tourism while you're actually intending to give birth so the child automatically obtains citizenship, that's already visa fraud, isn't it? Well, so this is actually a very super complicated area. And you might say, well, why is that? And I'll give you the reasons for that. First, if you were to go to an embassy and say, here's a doctor's letter from my doctor in X country that says that I have a rare disease that can't be treated in my country, and so the pregnancy is going to kill me unless I get access to this and this, and I go to the U.S., and you have all of that, and they predisclose that and they let you in the country, they give you the visa, et cetera, then that's birth tourism in a way, but that's allowed.

19:31And people do that all the time. People come to the U.S. for high-risk pregnancies who have money to do this, and they give birth here. And so that's not considered birth tourism. So then the question is, well, then what is considered birth tourism? And so that would be where you've actually made a misrepresentation. So either when you applied for a visa at the embassy, you knew you were pregnant and you didn't disclose this and you were coming for the purpose of having that child in the United States, or you already had, let's say, a 10-year visa. so there was nothing to disclose to anybody at the embassy but the point is you said you were visiting the U.S.

20:11when you got here to the airport and then you ended up having a child here for the purposes of of giving that child U.S. citizenship and so the question is that's going to be the more likely scenario of where they're going to say that the birth tourism took place is that someone wasn't pregnant at the time they got their visa, but they entered when they were pregnant much later. And at that time, gave birth maybe one month or two months later or something like that. But that's going to be very tricky to show there was a misrepresentation there versus that something else happened and that there was an emergency which required the parent not to travel.

20:54And so all of these will actually get caught up in what are called, I would say, fact-specific contextual litigation. And so none of this is very easy to determine. But yes, if you can show that you actually made a misrepresentation, that would be visa fraud. The State Department said today in announcing all the visas they've revoked, a U.S. embassy in North Africa revoked over 100 visas for birth tourist parents who came to the U.S. primarily to give birth so their children would get U.S. citizenship. The problem is, the only way to really figure that out, because you might start with a presumption, okay, how many people arrived on a visitor visa, and then when they arrived on a visitor visa, gave birth less than 90 days after they arrived on a visitor visa, and then from that they would presume that that was a lie and that was meant to be birth tourism.

21:47But the question is, are there any other extenuating circumstances in any of those cases. But that's what they're currently doing is they're applying this presumption that anyone who gave birth less than 90 days after they arrived in the United States on a tourist visa was necessarily lying and coming for birth tourism reasons. And Leon, I mean, is this order retroactive? So someone who... What's not clear is it doesn't say, like in the birthright citizenship original January 2025 executive order, it said this is going to apply prospectively. This one doesn't say it's going to apply prospectively.

22:23So the point is, theoretically speaking, that they might, when anybody comes and applies for a passport, not give them said passport on the grounds that they violated this executive order and then try to force that issue into litigation. Stay with me, Leon. Coming up next on the Bloomberg Law Show, we'll talk about the Trump administration hiring bounty hunters. The Big Take podcast from Bloomberg News keeps you on top of the biggest stories of the day. My fellow Americans, this is Liberation Day. Stories that move markets. Chair Powell opened the door to this first interest rate cut. Impact politics.

23:04Change businesses. This is a really stunning development for the AI world and how you think about your bottom line. Listen to The Big Take from Bloomberg News every weekday afternoon on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. The Department of Homeland Security is basically hiring bounty hunters to track down immigrants who've been deported and are now living in Mexico, Guatemala, and Honduras. The program is called the Tracing and Payment Recovery Services Program, with a cost capped at$9 million over the next two years. DHS is hiring private investigators to track down deported immigrants who owe the government civil immigration fines.

23:52But their payment doesn't depend on any money actually being recovered. I've been talking to immigration law expert Leon Fresco of Holland and Knight. Leon, the investigators have to take photos of homes or get other records like utility bills to document where the deportee is living and deliver penalty notices to them. But they don't have to recover any money. So what's the point? Start by telling us about these fines. There's a statute which says if you're here illegally, you owe$998 a day for every day you're here illegally. And so some individuals have been given fines of up to$1.8 million, which is the most you can give, because it only has a five-year statute of limitations.

24:38And so there's been 103 ,000 total fines totaling approximately$84 billion. And so now, yes, the Department of Homeland Security is hiring these private companies to track down immigrants in Mexico, Guatemala, and Honduras to pay the fines that they didn't pay, even though they left. So originally we were being told that the fines were to make people leave. Now when the people are leaving, they're still saying, well, you owe the fines. And I think the reason for this is probably not meant to collect the fines so much. There were a lot of people who if they left, they were being told if you leave, you could come back and reapply and come into the U.S.

25:16That's literally one of the deals that you used to hear this administration say. Well, now they're saying, no, no, no, you can't come in until you pay these fines. so the fines are being used as a basis to not let people, in fact, come back in. And so that's why I think you're seeing an insistence that you pay these fines before you actually will be allowed back into the United States. It's trying to create more of a permanence to the ban of people who voluntarily leave the United States, which is they were being asked to leave. You would think you would want to reward them leaving, but now they're being told, no, you actually have to leave and now pay these fines.

25:55Yeah. And so the program is set at nine million dollars over the next two years. They're going to pay these private investigators or bounty hunters to find people and serve them with notices and get no money back for a cost of nine million dollars. It seems it seems absurd. It does seem like one would want to take a bet on the underside. Is over or under nine million going to be collected from this group? I'll go for under. Yeah, if one was at a casino, I might advise that person to bet under. But nevertheless, we shall see. Anything could happen. Now, there may be enough people that want and need to come back to the U.S.

26:38to do pay the fines. But the question is, did you need a private company to do that? Or did that already happen because they went to an embassy and were told you have to pay this fine in order to get the visa? So I don't know how many people who don't want to come back and who are yet tracked down by the private contractor will actually only pay their fine because they were tracked down by the private contractor. That, to me, seems very unlikely that they make back their$9 million, but we'll have to wait and see. They're using this already inside the United States, right? ICE has awarded these skip tracing contracts.

27:15Well, yes. And inside the United States, it's different because there's people who have assets here that you can theoretically confiscate. But once someone's left the United States, then the question is, what can be done? It's very unlikely that another country will cooperate with U.S. ICE orders telling them to confiscate some property in a foreign country in order to pay fines in the United States. We will have to see if any country actually would willingly acquiesce to such an attempt. You mentioned$84 billion in fines. The Legal Aid Society is suing over that, right? Yes, correct. There's a lawsuit over this.

27:54There's a lot of congressional oversight about this. You have Senator Durbin and Senator Padilla saying that this shouldn't be the case and trying to get the administration to roll this back. So we'll see if anything happens. I mean, the fines are congressionally imposed, meaning the Congress has authorized the fines. I've actually, in cases where some of these fines have been brought to my attention, I've actually been very successful in getting the fines revoked when you can explain to the administration. So most of these fines that are not being revoked is because people haven't actually tried to revoke them.

28:29So it does become tough to make an argument as to whether these fines should be revoked. I don't see long term the Supreme Court saying that the fine should be revoked. But what probably will happen is that at some point in the next five, 10, 20 years, whenever there will be an administration who forgives these fines, I'd imagine. But we'll have to wait and see. Yeah, because what Durbin and Padilla said when they complained about this to Homeland Security Secretary Mark Wayne Mullen and Todd Blanch in a letter, it said that the Trump administration has carried out a vindictive mass deportation campaign, which has included slapping arbitrary and potentially unlawful fines on dreamers, survivors of domestic violence and green card applicants.