President Donald Trump’s effort to seize control of the Federal Reserve by firing Governor Lisa Cook over bogus charges of mortgage fraud ran into a wall of opposition during arguments before the Supreme Court on Wednesday.
The justices, both conservative and liberal, repeatedly panned the administration’s argument that the president can fire a Federal Reserve Board governor “for cause” without any judicial review or due process for the accused. It was clear that, no matter the ideological position of the justice, they do not want to mess with the central bank’s independence.
The Federal Reserve would not be independent “if there is any level of cause” for removal, as the Trump administration argued, Chief Justice John Roberts said.
And that independence is exactly what’s at issue in this case. When Congress created the Federal Reserve, it made it independent of presidential control by restricting the removal of its Board of Governors to cause only. That means the president cannot fire a governor for policy reasons. No governor had been removed by a president for cause until Trump attempted to fire Cook.
Trump’s removal of Cook on trumped-up charges of mortgage fraud occurred amid his public pressure campaign to get the Fed to lower interest rates. It also comes as the Department of Justice announced a criminal investigation into Federal Reserve Chair Jerome Powell. This context indicates the allegations of mortgage fraud are really a pretext for Trump to seize control of the central bank.
