Last week the United States Supreme Court (SCOTUS) heard oral arguments on a case that has been getting much press due to the unique circumstances surrounding the controversy. It’s a face-off between the President and the Federal Reserve Bank (aka “the Fed”), and the stakes couldn’t be higher. Jerome Powell, the current Fed Chairman, referred to the case as “perhaps the most important legal case in the Fed’s 113-year history,” according to Politico.
What’s at stake? A lot, actually. It’s an epic power struggle between the Chief Executive of our country and a pseudo government agency (the Fed) that was created by statute in 1913, and has been the center of many a political squabble despite the Fed (supposedly) being a non-political body. With this case, SCOTUS could set a precedent regarding the circumstances under which a Fed board member can be fired, which the statue (the Federal Reserve Act) permits when there is “cause.” It is a case of first impression, meaning a President has never previously fired a Fed governor for cause, and so the courts have never had to decide what “for cause” means, until now.
The case is called "Donald J. Trump, et al. v. Lisa D. Cook," and it arises from President Trump’s firing of Fed governor, Lisa Cook, last August. Trump invoked his power under the Federal Reserve Act to fire Cook “for cause” when it came to light that Cook allegedly lied on a mortgage application in order to gain a more favorable interest rate on her loan. Cook refused to leave her position, claiming the President didn’t have proper cause to remove her, and she sued Trump in an effort to keep her job. A Biden appointee, Cook is claiming President Trump is trying to remove her solely for political reasons which, she argues, does not constitute “for cause.”
But the Federal Reserve Act is clear… a President has the power to appoint the Fed governors, and the power to remove a governor “for cause”. The underlying case will decide whether or not a President has sole power to determine what is good cause for a firing, or whether some other body or court has the right to decide that.
Last week, SCOTUS heard oral arguments not on the underlying case, but instead on the issue of whether or not Cook can keep her job whilst her lawsuit against Trump winds its way through the courts. I was on NTD News to discuss the issues at hand, as well as the issues of the underlying case, and the arguments each side is making in an attempt to sway SCOTUS to rule in their favor. You can watch my interview HERE, or you can click the video above.
There is no set date for SCOTUS to render their decision, but the longer they delay, the longer Cook remains on the Fed’s Board of Governors in defiance of Trump’s firing of her several months ago.
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