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The Supreme Court blocked President Trump’s firing of Federal Reserve board member Lisa Cook on Monday in a 5-4 vote, ruling she can remain on the job as her legal challenge moves forward.
Trump became the first president to attempt to fire a Fed board member in its 112-year history when he sacked Cook last year over accusations of mortgage fraud.
Chief Justice John Roberts wrote that the president didn’t provide her enough process to contest the allegations.
“To be clear, the ultimate question of whether the President can remove Cook for cause will depend in part on the underlying facts,” Roberts wrote.
“In this opinion, we have not addressed the facts, as they have yet to be found or analyzed under the relevant legal standards. Rather, we have simply addressed the parties’ arguments about the appropriate legal standards under which the facts must be evaluated,” he continued.
The case now returns to a lower court, where Cook will continue to press her claims.
The decision hands a major loss to Trump just after the Supreme Court gave him a major win in his broader campaign to increase control over independent agencies. The justices expanded presidential power by allowing Trump to fire leaders at those other agencies, while carving out the Fed to keep its removal protections intact.
Last August, Trump fired a Fed board member for the first time in its history by terminating Cook over a referral from Federal Housing Finance Agency Director Bill Pulte, who suggested she illegally designated properties in both Michigan and Georgia as primary residences to obtain better financing terms.
Cook has not been criminally charged and denies wrongdoing. She says it’s a pretext and argues her firing really concerns Trump’s frustrations that the central bank has not lowered interest rates quickly enough.
The legal battle has raised questions about the central bank’s independence at a time when Fed officials are at increasing odds over how it determines its policies. Expectations of a rate hike have recently increased following resilient jobs numbers and concerns about high inflation. The Fed is also in a period of transition as Trump’s nominee, Kevin Warsh, has taken over as the central bank’s chair.
The central bank’s governing statute, enacted in 1913, only allows the president to remove Fed board members “for cause.”
The law doesn’t explicitly define cause, however. Trump’s first attempted firing prompted the Supreme Court to get involved.
The case came as the court also considered Trump’s broader efforts to reshape federal agencies across the executive branch that have traditionally enjoyed a degree of independence from the White House.
Unlike those agencies, where the president has claimed their firing protections should be struck down for violating the separation of powers, Trump has not tried to invalidate the Fed board members’ protections.
Instead, he contends he complied with the restrictions when he terminated Cook. Trump says the mortgage fraud accusations amounted to valid cause.
The Trump administration urged the justices to take a broad view and rule that “cause” means the president has discretion to fire Fed board members for reasons related to their conduct, ability, fitness or competence.
Cook’s lawyers put forward a narrower reading. They said the Fed’s protections should mimic other agencies’ protections in listing out valid causes such as inefficiency, neglect or malfeasance, saying Trump’s broad interpretation would cripple the Fed’s independence.
The Trump administration appealed to the Supreme Court after lower-court judges sided with Cook. The case now returns to those lower courts for further proceedings, and she’ll remain in her job in the meantime.
Ella Lee contributed.
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