Hitler, Klan, Murder Hypotheticals Abound in SCOTUS Arguments on Trump Fed Firing

Conservative-leaning justices had tough questions for whether President Donald Trump can fire a member of the Federal Reserve Board of Governors, in a Supreme Court case that could have a major impact on monetary policy and the economy. 

Trump had attempted to oust Federal Reserve Board Governor Lisa Cook based on alleged misstatements she made on mortgage documents. Cook has denied any wrongdoing. 

The question in the case Trump v. Cook is whether a president can fire a member of the Federal Reserve Board of Governors, or whether the institution created in 1913 has independence from the executive branch.

At oral arguments in the case on Wednesday, Justice Amy Coney Barrett asked if the court should consider the severity of an accusation in determining whether a firing is justified. 

“If she were accused of murder or something like that, if we’re talking about something that was really an infamous crime, should we take the nature of the crime into account?” Barrett asked. 

Solicitor General John Sauer said the court should consider the “sweeping, powerful authority over the entire United States economy” that a Federal Reserve governor has to set interest rates. He said the court should also consider how the board member’s objectionable conduct looks to “ordinary Americans.”

“There’s the appearance of having played fast and loose, or at least been grossly negligent, in getting favorable interest rates for herself,” Sauer said.

Federal Reserve Chairman Jerome Powell, currently the subject of a criminal investigation by Trump’s Justice Department over allegations of misspending, was present in the chamber on Wednesday for oral arguments.

Members of the Federal Reserve board are appointed by the president and confirmed by the Senate, but Trump’s ouster of Cook marked the first time a president removed a board member. 

The Federal Reserve, which sets monetary policy, has a heightened role for perceived independence. It is also funded primarily by private financial institutions, and not Congress.  

Cook contested her firing, saying a board member can only be removed “for cause” under the Federal Reserve Act, and that the act includes due process.

The administration argues the president has broad discretion to remove a member of the board of governors, and contends the allegations of Cook’s mortgage misstatements meet the “for cause” standard.

Justice Brett Kavanaugh was concerned that a “law bar” for the firing would weaken, if not “shatter, the independence of the Federal Reserve.”

Sauer said the administration is not arguing that Fed board members can be fired without cause. 

“In a sense, it’s a very high bar,” Sauer said. “It does protect them from the one thing that Congress was apparently most worried about, which is removal for policy disagreement.”

Kavanaugh replied that Cook’s firing could set a political precedent: “What goes around comes around.”

“A current president’s appointees would likely be removed for cause on Jan. 20, 2029, if there’s a Democratic president or January 20, 2033,” Kavanaugh said. “Once these tools are unleashed, they’re used by both sides.”

Sauer replied that “the president has always had this tool to remove governors for financial improprieties,” and that in recent years, governors have been “credibly accused of financial improprieties” but chose to resign.

Justice Sonia Sotomayor and other justices suggested sending the case back to the lower courts.

However, Chief Justice John Roberts questioned why the court should delay deciding the matter. 

“I don’t quite understand what sending it back [to lower courts] would be for, other than airing of the same sort of issues that we’ve been airing. this morning,” Roberts said. 

In an emergency order in October, the Supreme Court ruled that Cook could keep her job until the case is decided. 

By contrast, Justice Samuel Alito asked why the case must happen “in a hurried manner?”

“You began by laying out what you claim to be the factual basis for the for-cause removal. But no court has ever explored those facts,” Alito said to Sauer. “Are the mortgage applications even in the record in this case?”

Sauer said, “The text of the social media post that screenshots to the mortgage applications is in the record, but I don’t recall the, the paperwork itself is in the record.” Trump had posted a screenshot of Cook’s mortgage paperwork in a social media post.

Alito also pressed Cook’s attorney Paul Clement, a former U.S. solicitor general, about the assertion that conduct before an official takes office could not be grounds for their removal.

“Suppose that the office holder was permitted to resign from a previous job under a non-disclosure agreement based on a long and egregious pattern of sexual misconduct. That would not be cause for removal?” Alito asked. 

Clement replied that would “not be ‘for cause’,” but “would certainly be a basis for impeachment.”

Alito followed, “How about if, after the person assumes office, videos are disclosed in which the officeholder is expressing deep admiration for Hitler or for the Klan?”

Clement replied to the hypothetical, “I’m going to stick with my position, and I’m going to say that’s an official that would be impeached in a heartbeat.”

The post Hitler, Klan, Murder Hypotheticals Abound in SCOTUS Arguments on Trump Fed Firing appeared first on The Daily Signal.