WASHINGTON — The Supreme Court on Wednesday heard arguments regarding President Trump’s attempt to fire Federal Reserve board governor Lisa Cook over a past issue with a mortgage application. The justices appeared largely unconvinced by the claim that Trump has the authority to remove Cook without due process.
The Core of the Dispute
The case centers on Trump’s assertion that he has the power to unilaterally fire Cook, citing a potential misstatement she made in 2021 regarding her primary residence when applying for mortgages on properties in Michigan and Georgia. Cook’s legal team responded that she informed the lender the Georgia property was a “vacation home.” Trump announced on social media in August that he had “cause” to fire Cook following this information.
Lower courts – a federal judge and the D.C. Circuit Court – previously blocked Cook’s removal, reasoning that the alleged issues predated her appointment to the board. Trump’s legal team appealed to the Supreme Court in September, arguing this was “improper judicial interference.” The Court agreed to hear the case, but initially kept Cook’s firing on hold.
Implications for the Federal Reserve
Several justices expressed concern that upholding Trump’s claim could significantly undermine the independence of the Federal Reserve. Justice Brett M. Kavanaugh stated that such a ruling “would weaken if not shatter the independence of the Federal Reserve.” Justice Amy Coney Barrett questioned why a hearing was not held, asking, “Is there anything to fear from a hearing? Why not give her a chance to defend herself?”
The dispute also comes amid ongoing tensions between Trump and current Federal Reserve Chairman Jerome H. Powell, whom Trump has previously threatened to fire. More recently, Trump’s prosecutors indicated they were investigating Powell for possible false statements made during a congressional hearing.
What Happens Next?
The Supreme Court’s decision could take several forms. The justices could rule that Trump must provide Cook with a hearing before any removal proceedings can begin. Alternatively, they could determine that the alleged mortgage application issue does not constitute sufficient “cause” for removing a Federal Reserve board governor. It is also possible the court could rule on the scope of presidential authority regarding appointments to the Federal Reserve.
Frequently Asked Questions
What prompted Trump to seek Cook’s removal?
Trump posted on social media in August that he had “cause” to fire Cook after being informed of a potential issue with her mortgage applications in 2021.
What did the lower courts decide?
A federal judge and the D.C. Circuit Court both blocked Cook’s removal, finding that the alleged issues occurred before her appointment and therefore did not justify firing her.
Why is the Federal Reserve’s independence important?
Justice Kavanaugh argued that upholding Trump’s claim of absolute power would “weaken if not shatter the independence of the Federal Reserve.”
How might a ruling in this case affect the future of presidential appointments to the Federal Reserve?
