Lisa Cook takes the oath of office to serve as a member of the Board of Governors at the Federal Reserve System at the Federal Reserve in Washington on May 23, 2022
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Drew Angerer/Getty Images
The Supreme Court on Thursday shot down President Trump’s attempt to fire Lisa Cook, a member of the Federal Reserve governing board, at least for now. The court’s decision means Cook will stay in her job until her legal challenge to her firing plays out in the lower courts.
That process could take considerable time, and in the meantime, Cook, the first African-American woman to serve on the Fed Board, will remain in her position, unlike other independent agency heads who have been fired at will by Trump, without any finding of wrongdoing. In each of those cases, the Supreme Court refused to reinstate the agency heads while their cases were being considered by the court.
The court, however, treated the Cook case differently.
Writing for the 5-4 majority, Chief Justice John Roberts said that the Fed is different from other government agencies because it is a “uniquely structured… entity that follows in the distinct historical tradition of the First and Second Banks of the United States.”
Therefore the President cannot fire members of the Fed board at will; they can only be fired for cause. And because there have been no lower court findings on Trump’s allegations of wrongdoing against Cook, the case will now return to the lower courts for further examination. Meanwhile, Cook will remain on the Fed Board.
Trump maintains that he gave Cook adequate notice of her firing by announcing it on his Truth Social page, and that he owed her no chance to rebut the allegations or to be heard on the matter.
As to Trump’s claim that Cook falsified documents to obtain loans on two different properties she listed as her primary residences, Cook has vehemently denied the charges, and her lawyers accused administration officials of “cherry picking” from her mortgage applications to make perfectly legal mortgage documents seem somehow nefarious. To underline the point, her lawyers pointed to recent reporting that four of Trump’s Cabinet members, as well as acting Attorney General Todd Blanche, submitted similar mortgage applications without any suggestion of wrongdoing. The lower courts will now have to sort all that out.
Congress established the Federal Reserve Board in 1913 after a series of financial panics in the late 1800s. Its job is to set monetary policy for the country—including interest rates and other economic measures when needed. In establishing the Fed, Congress sought to insulate the board from destabilizing political pressures by setting limited 14-year terms for Fed board members and providing that they could be fired only for cause, meaning neglect of duty or malfeasance in office.
As a result, no president until Trump has tried to fire any of the Fed’s board members. And were Trump to ultimately succeed in firing Cook, there is little to no doubt that he would try to fire other Federal Reserve Board members so that he could name a majority of the board’s members. Indeed, Trump’s Justice Department launched a criminal investigation of then-Fed Chair Jerome Powell over cost overruns at two Federal Reserve building renovations but the department dropped the inquiry after a Republican senator threatened to block Trump’s nominee to succeed Powell as Chairman. And Powell, enraged by the attack on his integrity, has apparently decided to serve out the rest of his term as a regular member of the board rather than give Trump a chance to fill another seat.
Of course, none of this political maneuvering made it into Thursday’s Supreme Court opinion. But in trying to oust Cook, the first Black woman appointed to the Fed board, the Trump administration accused her of falsifying documents to obtain loans on two different properties she listed as her primary residence. Cook vehemently denied the charges, noting, among other things, that one of the two properties was listed as a vacation home. Her lawyers accused administration officials of “cherry picking” from her mortgage application to make perfectly legal mortgage applications seem somehow nefarious; to underline the point, her attorneys pointed to recent reporting that five of Trump’s Cabinet members, including the acting Attorney General, made similar mortgage applications without any suggestion of wrongdoing.
The president, however, maintained that once he had determined he had cause to fire Cook, the decision was unreviewable by any court. The Supreme Court didn’t buy that argument, or several others put forward by Trump. But because the case now returns to the lower courts, the future of the Fed’s independence remains at least partially in doubt, and it is why, with the exception of former Chairman Powell, every living current or former Federal Reserve Board chair, plus Treasury secretaries and prominent economists from both parties signed on to a Supreme Court brief urging the court not to tinker with the Fed’s independence.
The court’s decision in the Federal Reserve case, however, was very different from its decision dealing with other independent regulatory agencies. While the court sought to protect the Fed’s independence, it did exactly the opposite when it came to the Federal Trade Commission, the National Labor Relations Board, and other agencies, some of which Congress first established as independent as far back as the 1880s. Though the Supreme Court unanimously upheld the independence of these agencies in 1935, on Thursday the Court’s conservative majority reversed that decision by a 6-3 margin.
