Supreme Court considers Trump’s power to fire a Federal Reserve official

The U.S. Supreme Court heard arguments on Wednesday in a case regarding whether the president of the United States should have the ability to fire a member of the Federal Reserve, an independent agency within the federal government.

Many justices seemed wary of the Trump administration’s position. It is unclear whether the higher court will send the case back to the lower courts for further examination or if it will issue a decision on whether or not the president had valid grounds to dismiss Federal Reserve governor Lisa Cook.

President Donald Trump published a letter in August firing Cook, claiming she engaged in mortgage fraud in 2021, a year before she was appointed to her position by former President Joe Biden. The Trump administration accused Cook of citing two different properties as her “primary residence.”

On Monday, Trump posted on social media two photos of what appear to be the Michigan home and the Atlanta condo Cook allegedly signed as her “primary residence” just days apart.

During oral arguments, U.S. Solicitor General D. John Sauer said “it’s impossible” that Cook, a top decision-maker over U.S. monetary policy, intended to honor both mortgage loan agreements.

“The American people should not have their interest rates determined by someone who was, at best, grossly negligent in obtaining favorable interest rates for herself,” Sauer said.

Prior to the Supreme Court agreeing to hear the case in October, Cook took Trump’s firing of her to court, and both a lower court and the U.S. Court of Appeals for the District of Columbia paused Trump’s move against Cook.

Her complaint accused the president of “unprecedented and illegal” actions in pushing for her termination, “which, if allowed to occur, would be the first of its kind in the Board’s history,” Abbe Lowell, Cook’s attorney, argued in the filing.

Lowell argued it would violate the Federal Reserve Act, which allows removal of a governor only for cause, something like a claim about mortgage applications Cook filed before her Senate confirmation does not provide.

Cook has repeatedly denied the allegations and has remained in her federal role throughout the legal battle.

Justices seem skeptical of Trump admin’s argument

No president in the history of the Federal Reserve has attempted to fire an agency member “for cause” — a term that SCOTUSblog points out is not defined in the law.

“The Federal Reserve is a uniquely structured entity with a distinct historical tradition,” Cook’s attorney, former U.S. Solicitor General Paul Clement, said during arguments. “Part of that historical tradition is an unbroken history going back to its founding in 1913 in which no president from Woodrow Wilson to Joseph Biden has ever even tried to remove a governor for cause, despite the ever-present temptation for lower rates and easier money.”

The “for cause” removal provision “would reduce removal restrictions to something that could only be recognized as at-will removal,” Clement added.

The justices pressed the Trump administration on whether it met the requirements for removal in this case, especially on an emergency basis. Cook has repeatedly argued that she should have been granted due process in her firing.

“Why are you afraid of a hearing? Or what would there be that would be wrong with process? I mean, you spent a lot of time litigating the case. It’s gone up from the district court to the court of appeals and now we’re here,” conservative Justice Amy Coney Barrett asked Sauer.

“If there isn’t anything to fear from a hearing, and if you have the evidence, why couldn’t those resources have been put into a hearing?” she added, to which Sauer said the process in which they handled the firing gave Cook adequate time for response.

Justice Brett Kavanaugh also questioned why the Trump administration wouldn’t be open to further judicial review and was skeptical of the future implications if the court ruled in favor of Trump and allowed Cook’s firing.

“If this were set as a precedent … what goes around, comes around, all the current president’s appointees would likely be removed for cause on January 20, 2029, if there’s a Democratic president on January 20, 2033, and then we’re really at at-will removal,” Kavanaugh said.

“Once these tools are unleashed, they are used by both sides, and usually more the second time around,” he continued. “And I think that’s what we have to make sure … again that can’t drive the decision necessarily, (but) we have to be aware of what we’re doing and the consequences of your position for the structure of the government.”

If Cook is removed from the board, Trump could then appoint a new Federal Reserve governor of his choosing.