Supreme Court airs doubts over Trump power to fire Fed member
Published in Political News
WASHINGTON — The Supreme Court appeared ready to rule against President Donald Trump’s attempt to immediately remove Federal Reserve Board member Lisa Cook, expressing skepticism during oral arguments Thursday about a president’s control over the central bank.
The Trump administration had asked the justices to overturn lower court rulings that kept Cook in place while she challenges Trump’s effort to remove her over allegations of mortgage fraud. Congress gave members “for cause” protections in the law creating the Fed, and lower courts agreed that the firing was likely unlawful and reinstated Cook.
During more than an hour and a half of arguments, the justices questioned not only Trump’s request for the Supreme Court to allow him to remove Cook as her challenge plays out in court, but his arguments about the structure of government and the independence of the Federal Reserve.
Although both sides agreed that Trump does not have the power to unilaterally remove Cook as he does with other federal officers, a majority of the justices pushed the administration on whether its position in the case amounted to the same thing.
Solicitor General D. John Sauer argued that Trump’s claim of Cook’s impropriety was enough cause to fire her, and it’s a decision the courts could not second guess.
Justice Brett M. Kavanaugh, in an exchange with Sauer, said Trump’s position would “weaken, if not shatter, the independence of the Federal Reserve.”
Kavanaugh also said he worried that “what goes around comes around,” and siding with Trump’s arguments would effectively mean the Federal Reserve would change along with presidential administrations.
“We have to be aware of what we’re doing and the consequences of your position for the structure of the government,” Kavanaugh said.
Chief Justice John G. Roberts Jr. asked if the courts were “wasting our time” with the case if the Trump administration was correct that the court couldn’t review the cause of the firing.
The case comes amid the collision between Trump’s yearlong effort to expand the power of the presidency with his frustration with the Federal Reserve’s decisions around interest rates.
Sauer argued that Congress gave members of the Federal Reserve protection against removal due to policy disputes, and requiring cause for firing is “in a sense a very high bar, it’s a very strong protection.”
Trump sought to fire Cook last year, arguing that she made misrepresentations on mortgage paperwork for loans on two homes prior to her appointment to the Fed in 2022 under the Biden administration.
During the arguments, Sauer claimed that “there’s the appearance of having played fast and loose or at least been grossly negligent in getting favorable interest rates for herself,” giving Trump the authority to fire her.
Justice Amy Coney Barrett questioned why the administration resisted any sort of hearing to test the allegations against Cook. “Why are you so afraid of a hearing?” Barrett asked.
Justices Neil M. Gorsuch and Samuel A. Alito Jr. brought up issues related to how the courts could mandate a hearing for Cook when one is not written out in the statute. Roberts also questioned what use a hearing could be when most of the facts around the mortgage representation are not in dispute.
Paul Clement, the attorney for Cook, argued that Congress did not intend for the president to have wide latitude to remove a member of the Federal Reserve, and allowing Trump to do so would make markets that rely on the board’s interest rate-setting powers nervous.
Clement also pushed back on a series of hypotheticals about the president’s power to remove a governor for things like praising Hitler or committing domestic violence while in office. Clement said that impeachment would still be available, but Congress intended the Federal Reserve to be independent.
“Here, I think it’s less important that the president have full faith in every single governor, and it’s more important that the markets and the public have faith in the independence of the Fed from the president and from Congress,” Clement said.
Sauer pushed back on arguments that allowing the removal of Cook would spell economic disaster in the markets, pointing to a few days last year when Cook was removed but before a court decision in her favor. Sauer argued that was a “natural experiment, so to speak, about whether or not the prediction of doom” would come true.
That period took place after the Supreme Court had already indicated that it would treat the Federal Reserve differently than other agencies, in an emergency order allowing the firing of members of the National Labor Relations Board and Merit Systems Protection Board.
The justices are expected to issue a decision in the case by the conclusion of the term at the end of June.
The case is Donald Trump v. Lisa Cook.
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