By Jan Wolfe
Jan 21 (Reuters) – The U.S. Supreme Court heard arguments on Wednesday over President Donald Trump’s attempt to fire Federal Reserve Governor Lisa Cook. Here are some takeaways from the arguments in the case, a crucial test for the central bank’s independence.
A RULING AGAINST TRUMP SEEMS LIKELY
Comments by the justices during the two hours of arguments indicated that the court is not likely to grant the Trump administration’s request to lift a judge’s decision barring the Republican president from immediately firing Cook while her legal challenge continues to play out. The court has a 6-3 conservative majority.
A majority of the justices seemed focused on the manner in which they should rule in favor of Cook, rather than whether they should rule for her.
David Law, a constitutional law professor at the University of Virginia, said on X midway through the arguments that “it’s already clear that Lisa Cook will be keeping her job on the Fed.”
FOCUS ON DUE PROCESS
The president announced last August on his Truth Social platform that he was firing Cook in light of unproven allegations by Federal Housing Finance Agency Director Bill Pulte, a Trump appointee, that she committed mortgage fraud. Cook has publicly denied the allegations – calling them a pretext to remove her over monetary policy differences – and has not been charged with wrongdoing.
The judge who ruled against Trump in September found that his attempt to remove Cook without notice or a hearing likely violated her right to due process under the U.S. Constitution’s Fifth Amendment. Some of the justices on Wednesday suggested Cook should have been provided by the administration with a formal opportunity to address the allegations.
Conservative Justice Amy Coney Barrett pressed Justice Department lawyer D. John Sauer on why the Trump administration was “afraid” of giving Cook such a hearing. Barrett said it “would not have been that big of a deal” for Trump to have sat down with Cook and presented the alleged evidence against her.
KAVANAUGH A LIKELY VOTE FOR COOK
Conservative Justice Brett Kavanaugh, who like Barrett was appointed by Trump to the Supreme Court, also signaled that he is likely to rule in favor of Cook. Kavanaugh said at one point that the “simplest way to decide this case” would be to declare that “there was insufficient process” provided to Cook. Kavanaugh told Sauer that his arguments in the case would lead to presidents ousting Fed governors over policy disagreements and “would weaken, if not shatter, the independence of the Federal Reserve.”
QUESTIONS ABOUT AN ‘INADVERTENT MISTAKE’
Conservative Chief Justice John Roberts questioned whether the evidence against Cook is more consistent with an “inadvertent mistake” on her part rather than intentional wrongdoing. Sauer responded that, even if Cook made a mistake on mortgage paperwork, “it is quite a big mistake.”
Roberts seemed skeptical of that argument, saying “we can debate that, how significant it is in a stack of papers you have to fill out when you’re buying real estate.”
‘BIG PICTURE’ THOUGHTS
It seemed clear that the justices understood that a ruling in favor of Trump could upend the U.S. economy by eroding the Fed’s independence.
“If this were set as a precedent, it seems to me – just thinking big picture – what goes around comes around, and all the current president’s appointees would likely be removed for cause on January 20, 2029, if there’s a Democratic president, or January 20, 2033,” Kavanaugh said, referring to the dates for presidential inaugurations following the next two U.S. elections.
Barrett asked Sauer about the practical implications of allowing Trump’s unprecedented firing of a Fed governor, and noted that some economists had warned that Cook’s firing would trigger a recession. Barrett asked that if such a risk exists at this stage of the case “doesn’t that counsel caution on our part?”
(Reporting by Jan Wolfe;Editing by Noeleen Walder; Editing by Will Dunham)
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