SCOTUS Blocks Trump From Firing Lisa Cook From Fed Board

It's a narrow decision based on the Fed's unique stature and Trump's thoroughly empty case. But it's still a win for Fed independence.

In a 5 to 4 decision this AM, the Supreme Court rejected President Trump’s bid to fire Fed Governor Lisa Cook. The majority was clear that Trump failed to establish “just cause” to remove Cook, and agreed with the lower courts that she was denied due process to defend herself against phony (my word) allegations that Trump trumped up to remove her.

From the decision (my bold):

Acceptance of the Government’s position would in effect transform the Federal Reserve’s for-cause protection into at-will employment—an interpretive leap out of step with the statute Congress enacted and our Nation’s tradition of central banking protected from political interference.

Not only the fact of independence but also the appearance of independence is key to the Federal Reserve’s design. [italics in the majority decision]

The Government…contends that the President’s determination of “cause” is wholly unreviewable because the statute “commits the determination of cause to” the President alone…The Court sees no such commitment. Whether a Governor should be “removed for cause” is a decision only the President can make…But that does not mean that he may make that decision for any reason, or no reason.

The Court rejects the Government’s halfhearted contention that Cook in fact received due process.

The bolded clauses are noteworthy as they are direct repudiations of the weakness of Trump’s case and strong supports for Fed independence. In this regard, it’s a good day for both the rule of law and the ability of the Fed to operate free of political interference.

In a separate decision, however, the court, reverting to the 6-3 vote we’ve gotten used to, expanded the president’s power to remove heretofore independent regulators from other agencies besides the Fed. From the NYT:

In a major expansion of presidential authority, the Supreme Court cleared the way on Monday for President Trump to fire independent government regulators despite federal laws meant to protect their jobs. But the justices separately carved out an exception for the Federal Reserve, preventing the president from immediately removing Lisa D. Cook from the powerful central bank.

This is obviously highly problematic, as it gives corrupt admins carte blanche to stack the deck in ways that will allow them to disassemble regulatory guardrails in virtually every area outside of monetary policy.

And there’s nothing stopping Trump from digging for “just cause” firings at the Fed, which would require proof of “malfeasance or dereliction of duty.” But even a (slim) majority of the justices on this court, 6 of whom often bend over backwards to give Trump what he wants, would not get behind this egregious power grab at the Fed, one that would have had deep and destructive economic repercussions.