U.S. Supreme Court rules against Trump bid to fire Lisa Cook, Federal Reserve governor

The U.S. Supreme Court refused on Monday ​to let President Donald Trump fire Federal Reserve governor Lisa Cook as it stood firm to preserve the central bank’s cherished independence against an unprecedented challenge by the Republican president.

The court, in a 5-4 ruling, blocked Trump’s bid to become the first president to remove a Fed official since Congress created the central bank in 1913. Trump last August had cited unproven mortgage fraud allegations ‌in trying to oust Cook, the first Black woman to serve as a Fed governor.

Chief Justice John Roberts wrote that Trump “failed to afford Cook the procedural protections to which she was entitled by statute. Without such protections, she could not properly dispute the charges the president laid against her.”

The Federal Reserve’s governors “do not serve at the president’s pleasure — they instead serve staggered 14 year terms, and may be removed only ‘for cause,'” Roberts added.

As a Fed governor, Cook helps set U.S. monetary policy with the rest of the central bank’s seven-member board and the heads of the 12 ‌regional Fed banks.

Cook’s term is scheduled to run until 2038, after being appointed by Democratic president Joe Biden in 2022. A legal filing made public last week indicated that she had spent $1.2 million US on legal services to fight her removal.

“The Supreme Court’s decision ​to leave the lower ⁠court’s order ⁠in place ‌and affirm the need for real process and real cause recognizes that ⁠Federal Reserve independence is essential to fulfilling the congressional ‌mandate of price stability and maximum employment,” Cook said in a statement.

“This was never about mortgage documents signed years before I became a Federal Reserve governor,” she said. “It was an attempt to remove me on a manufactured pretext because I refused to bow to political pressure and continued to set interest rates based only on what would best serve the American people.”

Congress in 1913 passed the Federal Reserve Act, with provisions to shield the central bank ⁠from political interference, including requiring governors to be removed by a president ⁠only “for cause.” However, the law does not define the term nor establish procedures for removal.

The administration argued for an expansive view of Trump’s ⁠power in Cook’s case, saying that so long as the president identifies a cause for removal, that is within his “unreviewable discretion.”

Cook’s lawyers argued that granting him that power would eviscerate the Fed’s independence, disrupt markets and create a roadmap for future presidents to direct monetary ⁠policy.

U.S. District Judge Jia Cobb in September ruled that Trump’s attempt to remove Cook without notice or a hearing likely violated her right to due process, while adding that the allegations made against Cook likely were not a legally sufficient cause to remove her under the Federal Reserve Act as they related to conduct that occurred before she served in the post.

Trump’s targeting of Cook and ​a separate criminal investigation his administration launched against then-Fed chair Jerome Powell together represented the biggest challenge to the central ​bank’s independence since its founding.

Trump in a social media post characterized the ruling as occurring on a “strictly procedural basis” and said, without offering specifics, that his administration will “take appropriate action immediately to make sure that someone who has committed wrongdoing will not be making vital decisions concerning the Welfare of the United States of America!”

Roberts and fellow conservative Justice Brett Kavanaugh were in the majority, along with the ‌court’s three liberal justices Elena Kagan, Sonia Sotomayor and Ketanji Brown Jackson. Conservative Justices Clarence Thomas, Samuel Alito, Neil Gorsuch and Amy Coney Barrett dissented.

The ruling does not prevent the Justice Department from seeking an indictment of Cook on mortgage fraud allegations. Democrats have slammed the Trump administration for what it has said are politically motivated prosecutions and investigations of past and present critics of the president, including former FBI director James Comey and New York Attorney General Letitia James.

“As I have repeatedly said, I believe Lisa Cook will be indicted for mortgage fraud,” Bill Pulte said after Monday’s ruling. Pulte, a Trump administration official, first raised the Cook allegations publicly.

Trump can fire agency member, court rules

Trump has also used executive authority to quickly transform policies on immigration, military service, federal employment and beyond. To date, the ​Supreme Court has allowed most of those policies to go ahead despite legal challenges, on a preliminary basis, though the tariffs decision was a major exception.

Even as Cook received a reprieve, the top court on Monday backed Trump’s firing of a Democratic Federal Trade Commission (FTC) member, expanding his powers over the government and overturning its 1935 precedent that had recognized the authority of Congress to protect leaders ‌of certain regulatory agencies from presidential removal at will.

Overruling a landmark 1935 decision in a case called Humphrey’s Executor v. United States, the justices, in a 6-3 decision, invalidated tenure protections for FTC members enacted by Congress more than a century ago. Trump dismissed Rebecca Slaughter over policy differences.

The court in Humphrey’s Executor rebuffed Democratic president Franklin Roosevelt’s attempt to fire an FTC member over policy differences.

A 1914 ​law passed by Congress permits a president to remove FTC commissioners only for cause — such as inefficiency, neglect of duty or malfeasance ⁠in office. ⁠Similar protections cover officials at more than two dozen other independent agencies, including the ‌National Labor Relations Board and Merit Systems Protection Board.

Slaughter was appointed to her post at the consumer protection and antitrust agency by Biden, with a term due to expire in 2029.

Democratic senators and anti-monopoly groups voiced concern that Trump with the firings sought to eliminate the agency’s scrutiny of big corporations.

“It hands a massive amount of power away from Congress and to the president to shape economic decision-making in a way that will reward the rich and powerful, and at the expense of ordinary Americans,” Slaughter said in an interview on CNBC on Monday.

The Trump administration argued that the ⁠modern FTC grew to wield substantial executive power in the decades since the Humphrey’s Executor decision, draining that ruling of its force.