Even conservative Supreme Court justices seem skeptical of Trump's latest case

Ashley Murray, Indiana Capital Chronicle
21 January
U.S. Supreme Court Justice Samuel Alito (image from Wikimedia Creative Commons)

WASHINGTON — U.S. Supreme Court justices across the political spectrum appeared skeptical of President Donald Trump’s swift, informal dismissal of Federal Reserve Board Governor Lisa Cook, and his effort to influence the independent central bank that governs monetary policy in the United States.

The oral arguments Wednesday drew a high-profile appearance in the courtroom of Federal Reserve Chair Jerome Powell — now a target of a Department of Justice investigation. For months prior to the federal probe, Trump has threatened to fire Powell if the chair did not quickly lower interest rates.

For two hours, the justices heard arguments over whether Cook could remain on the board, as a lower court ruled, while litigation continues examining if Trump violated a “for cause” removal statute when he fired her over social media in late August.

Trump alleged in an Aug. 25 letter posted to his Truth Social platform that Cook committed financial fraud by lying on mortgage loan documents. Trump declared he had “sufficient cause” to remove Cook based on alleged “deceitful and potentially criminal conduct in a financial matter.”

Under the Federal Reserve Act, the president can only remove board governors “for cause” — as designed by Congress in an effort to preserve the central bank’s independence.

Trump claims his removals of members of independent government agencies are not reviewable by the courts.

Cook has denied any wrongdoing and challenged the president, the board and Powell, essentially arguing in court that an “unsubstantiated allegation about private mortgage applications,” submitted prior to her Senate confirmation, does not amount to cause for removal. Cook also argued that Trump denied her due process in not giving her notice or a chance to respond to his allegations.

Cook, an appointee of former President Joe Biden, has continued to perform her board duties, without interference from Powell.

Alito questions ‘hurried manner’ of firing

During lengthy questioning of U.S. Solicitor General John Sauer, Justices Amy Coney Barrett and Ketanji Brown Jackson asked what the risk would be in allowing Cook to remain in her job while the administration made its case to the lower courts.

“The question is: What is the harm of allowing that injunction to remain, because she’s in office now and would just continue?” Brown asked.

Sauer, Trump’s former personal defense lawyer, said the administration asserts “grievous, irreparable injury to the public perception, to the Federal Reserve, of allowing her to stay in office.”

“Do you have evidence related to the public perception, or is this just the president’s view?” Jackson, a Biden appointee, pressed back.

Sauer said the evidence regarding Cook’s two separate mortgage applications was contained in Trump’s “dismissal order,” referring to the letter posted on social media.

Moments later, Brown asked if Cook was “given the opportunity in some sort of formal proceeding to contest that evidence or explain it?”

“Not a formal proceeding. She was given an opportunity in public,” Sauer said.

“In the world? Like she was supposed to post about it, and that was the opportunity to be heard that you’re saying was afforded to her?” Brown asked.

“Yes,” Sauer replied.

Justice Samuel Alito, one of the high court’s most conservative members, asked Sauer why the removal had to be handled “in such a hurried manner.”

“You began by laying out what you claim to be the factual basis for the for-cause removal, but no court has ever explored those facts. Are the mortgage applications even in the record in this case?” asked Alito, who was appointed to the court under President George W. Bush.

“I know that the text of the social media post that screenshots the mortgage applications is in the record. I don’t recall if the paperwork itself was in the record,” Sauer said.

Federal Reserve independence

Over several minutes of back-and-forth, Justice Brett Kavanaugh pressed Sauer on the importance of the Federal Reserve’s independence.

“Let’s talk about the real world downstream effects of this. Because if this were set as a precedent, it seems to me — just thinking big picture, what goes around, comes around — all the current president’s appointees would likely be removed for cause on Jan. 20, 2029, if there’s a Democratic president, or Jan. 20, 2033,” argued Kavanaugh, who was appointed during Trump’s first term.

“We’re really at, at will removal. So what are we doing here?” he asked.

“I can’t predict what future presidents may or may not do,” Sauer replied.

“Well, history is a pretty good guide. Once these tools are unleashed, they are used by both sides, and usually more the second time around,” Kavanaugh said.

Kavanaugh later challenged Cook’s lawyer, Paul Clement, over whether his argument was “tilting the balance too far the other direction from where the solicitor general is.”

Clement responded, “This is a situation where Congress, political animals, one and all, knew better than anyone that the short-term temptations to lower interest rates and have easy money was a disaster in the long term, but was going to be irresistible.

“And so they tied their own hands by taking the Fed out of the appropriations process, and they tied the president’s hands,” the Alexandria, Virginia-based attorney said.

In a statement following arguments, Cook said the case is “about whether the Federal Reserve will set key interest rates guided by evidence and independent judgment or will succumb to political pressure.”

“Research and experience show that Federal Reserve independence is essential to fulfilling the congressional mandate of price stability and maximum employment. That is why Congress chose to insulate the Federal Reserve from political threats, while holding it accountable for delivering on that mandate. For as long as I serve at the Federal Reserve, I will uphold the principle of political independence in service to the American people,” Cook continued in the statement.

Regulating interest rates — to cool inflation or stimulate the economy — is one tool the central bank uses to accomplish its dual mandate on employment and price stability.

Subpoena issued

The arguments occurred just a dozen days after Powell received a federal grand jury subpoena as part of a Department of Justice probe into allegations that he lied to Congress about multi-year renovation costs to the central bank’s District of Columbia headquarters.

The revelation of a federal investigation of Powell ignited sharp criticism, even from some Republicans.

Powell alleged in a rare video statement that the administration’s “unprecedented action should be seen in the broader context of the administration’s threats and ongoing pressure.”

He continued, “The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the president.”

Trump first nominated Powell in 2017 to head the Federal Reserve, for a four-year term that began in February 2018. Biden reappointed him in 2021, and Powell received overwhelming support in an 80-19 Senate confirmation vote.

Wednesday’s arguments also came less than two months after the Supreme Court heard arguments in Trump’s firing of another member of an independent federal agency, Federal Trade Commissioner Rebecca Slaughter.

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