The Supreme Court sounded very skeptical Wednesday about President Trump’s unprecedented bid to fire Federal Reserve governor Lisa Cook as the president seeks to reshape the central bank to do his bidding on economic policy.
Conservative justices joined their liberal colleague in peppering the administration’s lawyer with questions about Trump’s controversial effort to oust the ally of Fed Chair Jerome Powell over a dubious and unproven mortgage fraud allegation.
Justice Brett Kavanaugh, a conservative Trump appointee, suggested that allowing Trump to oust Cook and install a loyalist could start a cycle of presidents replacing the Fed officials at will, with potentially dire consequences for its stewardship of the economy.
“(It) would weaken, if not shatter, the independence of the Federal Reserve,” Kavanaugh said.
Brett Kavanaugh
Susan Walsh/AP In this Oct. 8, 2018 file photo, Supreme Court Justice Brett Kavanaugh stands before a ceremonial swearing-in in the East Room of the White House in Washington. (Susan Walsh/AP)
Chief Justice John Roberts questioned the gravity of the charges Trump has leveled against Cook, which other justices pointed out have yet to be tested in any legal setting.
“We can debate that, how significant it is in a stack of papers you have to fill out when you’re buying real estate,” Roberts said, referring to the administration’s claim that Cook wrongly claimed two separate homes as primary residences.
Powell, who has also been targeted by a federal criminal probe into cost overruns for the Fed’s building renovations, sat in the audience along with Cook, the first Black women to sit on the prestigious Fed board.
The justices are hearing the case on an emergency basis after appeals courts denied Trump’s efforts to fire Cook immediately while the case makes its way through the legal system.
Trump Solicitor General John Sauer claimed the president has near-total authority to determine what amounts to allegations worthy of firing a Fed governor “for cause.”
Cook’s defense attorney countered that Congress created the Fed as a quasi-independent agency to prevent precisely such interference. He also argued that Cook has had no real chance to contest the accusations against her, claims that appeared to draw a sympathetic ear from the justices.
No ruling was immediately expected.
Critics of Trump frame the attack on Cook as a skirmish in the president’s broader bitter feud with Powell, whom he derides for failing to juice the economy by dramatically lowering interest rates.
Powell and other allies on the bank board fret that lowering rates too fast could reignite inflation.
Powell’s term as chairman expires in May. Trump has suggested that he has picked a replacement but has not yet publicly revealed who.
Markets are wary about efforts by Trump, or any president, to erode the independence of the Fed, which plays a huge role in guarding the stability of the U.S. and global economy. They fear that presidential meddling could lead to monetary policy miscues that could trigger sky-high inflation or other economic calamities.
