In a closely watched case, the US Supreme Court heard arguments on Wednesday over President Donald Trump’s unprecedented move to fire a Federal Reserve governor, raising concerns about the potential impact on the central bank’s independence.
The case centres around Trump’s decision to remove Lisa Cook from the Fed’s Board of Governors, accusing her of mortgage fraud – a claim she has vehemently denied. The administration argues it has met the legal requirement to dismiss a governor “for cause”, but Cook’s lawyers contend she was not afforded due process to dispute the allegations.
Several justices, including conservative appointees, expressed sympathy for Cook’s position and questioned the administration’s interpretation of the law. They warned that allowing the president to remove Fed governors without proper justification could “weaken, if not shatter, the independence of the Federal Reserve”.
The case is seen as a high-stakes test of the central bank’s autonomy, as it comes amid a broader debate over Trump’s efforts to influence the Fed’s policymaking. Federal Reserve Chairman Jerome Powell, who is also facing a criminal probe related to cost overruns at the central bank, was expected to attend the proceedings.
Solicitor General D John Sauer, arguing on behalf of the administration, dismissed concerns about due process, noting that Trump had alerted Cook to the mortgage issue on social media before formally firing her. However, Cook’s lawyers insisted there was “no fraud, no intent to deceive, nothing whatsoever criminal” in her mortgage filings.
Several justices, including liberal Sonia Sotomayor, indicated they were hesitant to greenlight Cook’s removal without the lower courts first resolving the issues around the mortgage allegations. Conservative Samuel Alito also questioned why the matter had to be handled in such a “hurried manner”.
The outcome of the case could have significant implications for the Fed’s ability to set monetary policy free from political interference, a key principle underlying its structure. As Justice Brett Kavanaugh, a Trump appointee, warned, the administration’s interpretation of the law could “weaken, if not shatter, the independence of the Federal Reserve”.
