Eight of the nine Supreme Court justices expressed wariness with what Justice Samuel Alito described as a “hurried” attempt from the Trump administration to oust Lisa Cook from her position as a Federal Reserve board governor — and then to rush her case to the high court when lower courts allowed her to keep her post.
Several members of the Republican-appointed majority also expressed sharp disagreement with the Trump administration’s claim that judges lack the authority to review a president’s power to fire members from the Federal Reserve board.
“Your position that there’s no judicial review, no process required, no remedy available, very low bar for cause, that the president alone determines — and that would weaken, if not shatter, the independence of the Federal Reserve,” Justice Brett Kavanaugh, a Trump appointee, told Solicitor General John Sauer.
The Supreme Court’s decision could have broad ramifications for Federal Reserve independence, a cornerstone of American monetary policy and the status of the dollar as the world’s reserve currency.
The hearing comes just weeks after Federal Reserve Chair Jerome Powell revealed that the Justice Department opened a criminal investigation into his handling of the Fed’s office renovations. Powell has said the investigation is a “pretext” for an attempt to pressure the central bank for political reasons.
Powell attended Wednesday’s oral arguments, along with Cook and former Fed Chair Ben Bernanke.
Members of the Federal Reserve’s board of governors can only be removed for “cause.” Trump attempted to fire Cook in August, alleging she had lied on mortgage paperwork and therefore could not be trusted with her role in the Fed, which sets interest rates that influence mortgage lending rates.
Cook — an appointee of former President Joe Biden whose Federal Reserve board term ends in 2038 — argued that Trump’s real intent was to replace her with an appointee who would more quickly drive down interest rates. Trump did not give Cook an opportunity to explain the apparent discrepancies in her mortgage paperwork before he posted the letter firing her on his Truth Social account.
Wednesday’s oral argument didn’t concern the merits of Trump’s allegations about Cook’s mortgage paperwork, but whether the judicial branch had the power to ensure Cook could keep her job while additional litigation plays out.
Chief Justice John Roberts — in a sentiment echoed by every other member of the Supreme Court except for Justice Clarence Thomas — expressed skepticism at the idea that the judicial branch couldn’t have a role in checking the legitimacy of a “for cause” firing.
“If there is any level of cause — and you indicate that there is some level of cause, right? — well, then you can’t be right about the idea that a court can’t order anybody who’s been removed to be reinstated,” Roberts told Sauer.
Kavanaugh, while pressing Sauer, suggested that the Trump administration’s position effectively erased the distinction between “for cause” and “at-will” firing — a notion that all of the Democratic appointees on the court also appeared to agree with.
The Trump administration’s position may open the door for a Democratic president to fire all of Trump’s Federal Reserve board appointees using “trivial or inconsequential or old allegations,” Kavanaugh said.
“It incentivizes kind of the ‘search-and-destroy and find something, and just put that on a piece of paper — no judicial review, no process, nothing, you’re done,'” Kavanaugh said.
Alito asked about why Cook had to be fired and the lawsuit against her handled in a “cursory manner.” He asked Sauer whether Cook’s mortgage application had even been entered into evidence in the case.
Sauer said he wasn’t sure if the paperwork itself had been seen by the district court judge who allowed Cook to keep her job, but that screenshots of the text of her mortgage application were included in social media posts.
“Is there any reason why this whole matter had to be handled by everybody — by the executive branch, by the district court, by the DC Circuit — in such a hurried manner?” Alito asked. “You began by laying out what you claim to be the factual basis for the for cause removal, but no court has ever explored those facts.”
Amy Coney Barrett, another Trump appointee, expressed anxiety about whether removing Cook could risk a recession, as economists have warned.
She wondered whether a dispute over mortgage paperwork was severe enough grounds to fire Cook, and why Trump didn’t make an effort to give her the opportunity to respond to his allegations.
“Sit down across the table in the Roosevelt room where the president provides Governor Cook with the evidence and waits to hear what her response is, gives her a chance to defend herself,” Barrett said. “I mean, that just wouldn’t be that big a deal.”
After Sauer finished addressing the justices’ questions, Cook’s lawyer Paul Clement took the podium. He said Sauer’s approach effectively erased the “for cause” standard required for firing members of the Fed.
“If there’s no judicial review, then this is all kind of a joke,” Clement said.
This is a developing story. Check back for updates.
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