JEROME POWELL, chair of the Federal Reserve and now the target of a federal investigation, watched from the public gallery on January 21st as the Supreme Court considered the fate of his embattled colleague, Lisa Cook. In 2023 Joe Biden appointed Ms Cook to a 14-year term on the Fed’s board of governors. In August President Donald Trump tried to sack her, alleging she had made false statements on mortgage applications. He wrote then that “deceitful and potentially criminal conduct in a financial matter” prompted him to dismiss her.
Unlike nearly all other officials to get the boot in Mr Trump’s second term, however, Ms Cook still holds her position. In September she won an injunction from a federal district court blocking her removal. When an appeals court refused to step in, Mr Trump filed an emergency plea at the Supreme Court. The justices declined to let the president immediately sack Ms Cook but, on October 1st, opted to hear oral arguments in the matter—a rare move for an emergency application.
No justice seemed squarely on Mr Trump’s side this week, but many were concerned about the case’s complexity. (“There are a million hard questions,” Justice Samuel Alito noted.) The statute that Mr Trump invoked allows dismissal for “cause”. Yet how does for-cause removal line up with statutes that permit other agency heads to be sacked only for “inefficiency, neglect of duty or malfeasance in office”? Does a governor’s behaviour before joining the Fed matter, or only her “in-office” actions? What kinds of notice (a Truth Social post?) and hearing are sufficient? Is Mr Trump suffering any real “irreparable harm” from Ms Cook’s continued presence on the Fed?
The arguments pitted John Sauer, Mr Trump’s solicitor-general, against Paul Clement, a renowned litigator for Republican causes who served as solicitor-general for George W. Bush. Mr Sauer has piled up wins at the high court for Mr Trump’s agenda, but after nearly two hours of questioning, Trump v Cook looks destined to go against the president.
Claiming two homes as primary residences, Mr Sauer argued, “impugns” Ms Cook’s “fitness…to serve as a governor of the Federal Reserve”. But Chief Justice John Roberts was sceptical. If Ms Cook’s error was “an inadvertent mistake”, was it grave enough to constitute “cause” under the relevant statute? Either way, the chief continued, do those facts matter, given Mr Sauer’s claims that courts may neither second-guess what counts as “cause” nor require an official’s reinstatement?
Justices from left to right dwelt on these paradoxes during Mr Sauer’s hour at the lectern. Justice Brett Kavanaugh led Mr Sauer through a series of questions about the purpose of Fed independence, seemingly in order to caution against presidents wielding too much authority over the body that sets interest rates. Justice Elena Kagan asked, incredulously, if Mr Trump “just really has to say, ‘Ms Cook, you’re fired’” without providing “any notice” or “any hearing”. Allowing a president to declare “I’m removing you for cause”, she said, gives a governor “no way to test” whether she is being sacked “for policy reasons”.
Justice Amy Coney Barrett invoked the case’s wider implications. “I’m a judge, not an economist,” she acknowledged, but experts caution that the court risks triggering economic harm if it sides with Mr Trump. No worries there, Mr Sauer assured her, as the stockmarket “went up for the next three days” after Ms Cook was sacked. Kate Shaw, a law professor at the University of Pennsylvania, says the exchange shows the justices enmeshed with politics and economics—a “real problem if you think the courts should be doing law”.
Steve Vladeck, a law professor at Georgetown University, reckons the court will end up coalescing around a narrow ruling against Mr Trump that ducks many of the most complicated questions. For Ms Shaw, a “nominal loss” for Mr Trump could yet “allow him to devise some very streamlined process for firing Ms Cook”—one with a better chance of withstanding another run through the courts. ■
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