Fed director fired by Trump
Supreme Court is likely to side with Lisa Cook
The US Supreme Court has taken a clear position: a majority of the justices appear ready to reject Trump’s request to fire Fed Director Lisa Cook.
The Supreme Court cast significant doubt on Wednesday that President Donald Trump has the authority to fire Fed Director Lisa Cook.
Not only liberal but also conservative judges were skeptical of the government’s allegations and emphasized the special constitutional status and independence of the Federal Reserve.
Lisa Cook is expected to remain in office for the time being
Observers now believe it is likely that the Supreme Court will reject Trump’s urgent application. “At the end of the two-hour hearing, many justices appeared to care more about how the court would rule in Cook’s case – not whether it would – and how quickly it would resolve her dispute,” CNN said.
But it remained unclear whether the justices would send the case back to the lower courts or decide outright that Trump had no good reason for Cook’s firing. The Supreme Court indicated that Cook will remain in office as long as her legal battle against President Trump’s attempted firing continues.
Are Trump’s allegations a “good cause”?
In August, Trump announced the immediate removal of Lisa Cook from the Board of Governors of the Federal Reserve because she allegedly provided false information when taking out loans for real estate. He cited a legal clause in the Federal Reserve Act.
Accordingly, governors generally have a term of office of 14 years – unless they are dismissed “for cause”. The Supreme Court has not yet established a clear definition of what such “good cause” could be. However, legal experts are convinced that a dismissal “for cause” must relate to official misconduct – and not to private matters.
“What you sow is what you reap”
In the hearing, even Trump-nominated Judge Brett Kavanaugh made it clear that he has significant reservations about the government’s position – particularly the idea that the government itself could define the “reason” for firing Cook.
“What you sow is what you reap,” Kavanaugh warned. He was alluding to the possibility that the next president might cite a questionable “reason” to fire Trump’s nominees to the Fed board based on “trivial, insignificant or old allegations that are very difficult to refute.”
Unprecedented action in the history of the US Federal Reserve
Cook is one of seven members of the Fed Board. These are proposed by the President and then confirmed by the Senate. Trump’s attempt to fire a Fed board member is unprecedented in the history of the Federal Reserve.
If he were successful, he could fill another seat on the Fed board as he saw fit – and thus have greater influence on the US Federal Reserve’s monetary policy course.
Powell and Bernanke in the audience
Adding to the drama of the Supreme Court hearing was the fact that Federal Reserve Chairman Jerome Powell and former Fed Chairman Ben Bernanke were in the audience – a powerful symbol of the Federal Reserve’s new, more confrontational approach to President Trump’s attacks.
Just over a week ago, Powell released a sensational video in which he criticized Trump for using all means possible to pressure the Fed to cut interest rates. First the video and now his presence in the Supreme Court – Powell seems willing to stand up to the US President in the final weeks and months of his term as Fed chairman. It’s about nothing less than the independence of the world’s most important central bank.
