The Supreme Court will convene this morning to hear oral arguments in Trump v. Cook — part of a White House effort to remove Federal Reserve Gov. Lisa Cook from the board of the U.S. central bank.
And after months of handwringing, this morning’s case represents the starkest threat to the Fed’s political insulation from the White House.
Lawmakers have spent much of the past year defending the Federal Reserve from an escalating series of attacks from Trump world. That campaign hit a high point last week with a Justice Department criminal probe targeting Fed Chair Jay Powell, who will be in the audience for today’s oral arguments.
But a Supreme Court decision that allows President Donald Trump to remove a Fed governor from the Federal Reserve Board “for cause” would hand the White House unprecedented power over the trajectory of monetary policy.
“I’m not holding my hopes high,” said Rep. Bill Foster (Ill.), the top Democrat on the House Financial Services subcommittee on financial institutions.
The case against. The White House has argued that Cook, a Biden-era appointee to the Federal Reserve Board, ought to be fired following allegations of “mortgage fraud.” The president has the authority to fire Fed officials “for cause,” which isn’t defined by statute.
Many Republicans, especially in the Senate, have worried about the loss of independence in this legal fight. But Rep. Andy Barr (R-Ky.), who chairs the Financial Services subpanel on financial institutions, said he’d seen enough for Cook to be removed.
“The Federal Reserve Act has a for-cause removal provision in it,” Barr said. “The Congress specifically contemplated conferring authority to the president to remove Fed governors for cause. If you’re a textualist, I mean, it’s really not a legal question — it’s a fact-sensitive question whether there was for-cause removal.”
“Everything I’ve seen suggests there was,” Barr added.
Key to Wednesday’s argument will be the Trump administration’s assertion that federal courts have no business assessing whether the cause cited has merit. Trump said he has a cause and that should be that, his lawyers argue.
The allegations against Cook originated with Federal Housing Finance Agency Director Bill Pulte and have not exactly held up to outside scrutiny. Cook denies the allegations “unequivocally” and has yet to be charged or found guilty of any wrongdoing.
As for the Supreme Court, justices have historically given the Fed cover here. Just last year, as the court weighed the firing of other “independent” agency officials at the National Labor Relations Board and Merit Systems Protection Board, the justices described the Fed as a “uniquely structured, quasi-private entity.”
“The administration has a theory that nothing should be independent of the president,” Rep. Jim Himes (D-Conn.) said. “That is a recipe for really screwing the monetary policy of this country and really badly weakening the economy.”
