Supreme Court to review Trump firing of Fed governor  

WASHINGTON (CN) — The Supreme Court on Wednesday said it would hear oral arguments over whether President Donald Trump could remove Federal Reserve member Lisa Cook from the board of governors, setting up a showdown over control of the nation’s central bank.

In the meantime, the justices deferred their decision on Trump’s emergency appeal, allowing Cook to remain on the board. The brief order said the justices will hear oral arguments in January.

The White House was not discouraged by the justices’ postponement of a decision on the appeal.

“President Trump lawfully removed Lisa Cook for cause from the Federal Reserve Board of Governors," White House spokesman Kush Desai said in an email. “We look forward to ultimate victory after presenting our oral arguments before the Supreme Court in January.”

The Supreme Court has greenlit Trump’s purge of independent regulatory board members despite the landmark 1935 precedent in Humphrey’s Executor v. United States protecting board members from interference from the executive. The Federal Reserve has been viewed as different from other entities because of its unique role.

Central bank independence and insulation from presidential control can be traced back to the creation of the Bank of England in 1694. These principles are shared throughout the global financial system, with only 12 nations allowing the removal of central bank board members at the executive’s discretion. Congress protected the Federal Reserve from at-will presidential removal in the Federal Reserve Act of 1913 and in the 1935 Banking Act.

Unlike his attempts to fire members from other regulatory boards, Trump advanced unsubstantiated claims of mortgage fraud to justify Cook’s termination.

The administration said Cook claimed properties in both Michigan and Georgia as her principal residence in mortgage agreements. Lenders typically offer lower interest rates for principal-residence mortgages.

Cook denies the accusation, and the Justice Department has yet to file any charges against her. Subsequent reporting further questioned the administration’s claims, unveiling documents where Cook described her Atlanta property as a vacation home.

She filed the 24-page suit in District of Columbia federal court on Aug. 28, setting up a significant legal battle over what has long been deemed a red line in the president’s ability to terminate political appointees.

A federal judge blocked Cook’s removal from the board while litigation continues on the legality of her termination, and a three-judge panel on the D.C. Circuit refused an emergency stay request, which would have allowed the government to force Cook out.

Trump asked the Supreme Court to correct “yet another case of improper judicial interference with the president’s removal authority.” U.S. Solicitor General John Sauer argued that Trump was irreparably harmed by allowing Cook to exercise executive power over the president’s objection.

Cook urged the justices to reject Trump’s emergency appeal, arguing that the justices shouldn’t wade into the thorny questions at the center of the case unnecessarily.

“The president urges the court to decide a host of novel legal questions about the operation of the statutory term ‘for cause’ and what process is required before an officer may be removed under that standard,” Cook wrote. “And he insists that the court should act on an undeveloped record to immediately alter the composition of the Federal Reserve Board on an emergency basis. Yet Governor Cook could (and will) obviate the need to resolve those difficult questions by demonstrating that she committed neither ‘fraud’ nor ‘gross negligence’ in relation to her mortgages.”

Cook warned of financial turmoil if the Supreme Court granted Trump’s appeal.

“A stay from this court would signal to the financial markets that the Federal Reserve no longer enjoys its traditional independence, risking chaos and disruption,” Cook wrote.

A group of experts on law, finance and economics backed up Cook’s claim, stating that the resulting loss of independence would hurt not only the Fed’s ability to regulate but Congress’ power of appropriations. They compared the resulting volatility of such de facto subordination to swings in the stock and bond markets earlier in the year.

“Such gyrations could prove mild relative to the dysfunction that might result in an environment where the country lacks a central bank focused on the long-term health of the economy,” the experts warned.

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