Supreme Court Casts Doubt On Trump’s Power To Fire Fed Official Without Proper Review

The Supreme Court on Wednesday appeared deeply skeptical of President Donald Trump’s claim that he can abruptly fire Federal Reserve board member Lisa Cook for alleged misconduct without giving her a forum to contest the allegations.

Several justices underscored the historical significance of the Fed’s independence from presidential control and pressed Trump’s Solicitor General D. John Sauer about his claim that removing Cook from her position required urgent action, rather than a review of unproven mortgage fraud allegations leveled by Trump and his housing czar.

Citing those fraud allegations, Trump purported to fire Cook last year. But Cook has remained in her position, winning legal battles at both the U.S. District Court in Washington, D.C. and the D.C. Circuit Court of Appeals. The justices agreed to allow those rulings to remain in effect until they had a chance to weigh the Trump administration’s emergency appeal.

Justice Samuel Alito questioned the “hurried manner” with which the legal battle has proceeded without a substantive review of the fraud allegations.

“No court has ever explored those facts,” he notes, describing the circumstances surrounding Trump’s attempt to fire Cook as “handled in a very cursory manner.”

That stood in stark contrast to the way the justices have treated a long list of efforts by Trump to assert unilateral authority over federal agencies and boards long considered to be independent of presidential control. The high court has repeatedly blessed Trump’s moves and allowed them to take effect while litigation was underway.

But the central bank has always been the ultimate test of presidential authority — one that the justices have long signaled may require a unique analysis. They have described the Fed as a “quasi-private” entity that has roots in iterations of the U.S. central bank that date to the earliest days of the republic.

Members of the Federal Reserve’s Board of Governors are protected by law from removal except for cause. Though Trump has contended such restrictions are unconstitutional in other cases, he cited the mortgage fraud allegations against Cook as a “cause” that satisfied the statute. Whether the courts have the authority to reject Trump’s claim of cause is an issue that has never been litigated.

At times during the argument Wednesday, the justices seemed to be debating how to rule in Cook’s favor, rather than whether to do so. Chief Justice John Roberts appeared to favor a ruling that would elaborate on the “for cause” standard, while others seemed inclined to issue a narrower decision that the law governing the firing of Fed governors requires more due process than Cook was afforded.

Justice Brett Kavanaugh pressed Sauer on the significance of the Fed’s historic independence, suggesting that if Trump’s bid to fire Cook succeeded, it could portend a cycle of “at will” removals of board members by future presidents.

“What goes around comes around,” the Trump-appointed justice said. “All the current president's appointees would likely be removed for cause on Jan. 20, 2029, if there's a Democratic president or Jan. 20, 2033, and then we're really at ‘at-will’ removal. So what are we doing here?”

Justice Amy Coney Barrett, also a Trump appointee, noted the potential economic consequences of threats to the Fed’s independence, saying that those ramifications could play into the public interest in the outcome of Cook’s case.

Trump’s effort to remove Cook comes as he has relentlessly pressured the central bank to dramatically lower interest rates. He has mused about firing its current chair, Jerome Powell, a clash that escalated further last week when the Fed chief disclosed that the Justice Department had sent grand jury subpoenas to the institution. Powell said the DOJ was seeking information related to his statements to Congress about renovations to the Fed’s headquarters but cast the move as a threat intended to push him to slash borrowing costs.

Minutes before the justices took the bench Wednesday, Trump attacked Powell again during a meandering speech in Davos, Switzerland — and said he expected loyalty from his nominees to the Fed. Trump said his past picks had told him what he wanted to hear but then acted differently once confirmed.

“This case is about whether the Federal Reserve will set key interest rates guided by evidence and independent judgment or will succumb to political pressure,” Cook said in a statement after the arguments. “For as long as I serve at the Federal Reserve, I will uphold the principle of political independence in service to the American people."

Both Cook and Powell were in the public gallery at the high court argument Wednesday, although they were seated on separate benches.

Markets are also closely watching the outcome of the case, as the decision could redefine the president’s relationship to the central bank, which was designed to be insulated from short-term political pressures.