What the Supreme Court has said about Trump's ability to fire Fed officials
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A pedestrian wears a "Make America Great Again" hat outside the US Supreme Court. Photo: Allison Robbert/Bloomberg via Getty Images.
President Trump's push to oust Federal Reserve governor Lisa Cook tees up the first test of the limits the Supreme Court recently set for politically-motivated threats to fire officials on independent boards like the central bank.
Why it matters: Trump has been hammering the Fed for months to lower interest rates and has repeatedly threatened to fire Cook and Chair Jerome Powell to make that happen, threatening the bank's independence.
Friction point: The Supreme Court ruled in May that the president "likely" has the ability to fire independent agency heads in a case involving members of the National Labor Relations Board and Merit Systems Protection Board.
- The majority ruling suggested that the president has wide authority over executive agencies, but it specifically rejected arguments that the same reasoning would allow Trump to fire members of the Fed.
What they're saying: "We disagree. The Federal Reserve is a uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States," the unsigned order says.
Yes, but: Justice Elena Kagan wrote a dissenting opinion that cast doubt on the majority's reasoning.
- She wrote that the "Federal Reserve's independence rests on the same constitutional and analytic foundations" as the NLRB, MSPB and other agencies rest on. She called the majority's order a "puzzle."
Context: Trump announced he was removing Cook from her position Monday night, citing Article II of the Constitution and the Federal Reserve Act of 1913, which allows the president to remove a Fed official for cause.
- Trump claims that a criminal referral issued by the Federal Housing Finance Agency that accuses Cook of mortgage fraud gives the president cause to remove Cook from her post.
The other side: Cook said in a statement that she would not resign because "no cause exists under the law" for the president to fire her, and "he has no authority to do so."
- Her attorney said Tuesday she plans to challenge her firing in court.
What we're watching: The president's allies started to lay the groundwork for firing Powell earlier this year, accusing him of lying to Congress about the cost of a massive building renovation project.
- No concrete steps have been taken to remove Powell, but Fed watchers are keeping a close eye on the president's desire to install loyalists to the board, potentially influencing the policymaking of the world's most important central bank.
Go deeper: Trump's war on the Fed is escalating
