Conservative and liberal United States Supreme Court justices have signalled scepticism towards US President Donald Trump’s bid to fire US Federal Reserve Governor Lisa Cook in a case with the central bank’s independence at stake.
During about two hours of arguments in the case on Wednesday, the justices indicated they were unlikely to grant the Trump administration’s request to lift a judge’s decision barring the Republican president from immediately firing Cook while her legal challenge continues to play out.
Some of the justices pressed D John Sauer, the US solicitor general arguing for Trump’s administration, about why Cook was not given a chance to formally respond to the unproven mortgage fraud allegations – which she has denied – that the president cited as justification for ousting Cook.
They also raised concerns about the effect on the economy of such a first-ever presidential firing from the central bank and the implications for the Fed’s cherished independence from political influence.
The case represents the latest dispute to come to the top US judicial body involving Trump’s expansive view of presidential powers since he returned to office 12 months ago.
When the court, which has a 6-3 conservative majority, agreed in October to hear the case, it left Cook in her job for the time being.
“This case is about whether the Federal Reserve will set key interest rates guided by evidence and independent judgment or will succumb to political pressure,” Cook, who attended the arguments, said in a statement afterward.
“For as long as I serve at the Federal Reserve, I will uphold the principle of political independence in service to the American people,” Cook added.
Federal Reserve Chairman Jerome Powell also sat through the nearly two hours of arguments in the packed courtroom.
‘Cause for removal’
Sauer told the justices that the allegations against Cook impugn her “conduct, fitness, ability or competence to serve as a governor of the Federal Reserve”.
“The American people should not have their interest rates determined by someone who was, at best, grossly negligent in obtaining favourable interest rates for herself,” Sauer said.
“Deceit or gross negligence by a financial regulator in financial transactions is cause for removal,” Sauer added, arguing that the allegations require immediate removal.
Cook has called the allegations against her a pretext to fire her over monetary policy differences as Trump heaps pressure on the central bank to cut interest rates and lashes out at Fed Chair Powell for not doing so more quickly.
Conservative Chief Justice John Roberts asked Sauer to explain whether his argument that Cook should be immediately removed applies if the basis of the mortgage allegations – that she cited two different properties as a principal residence – is an “inadvertent mistake contradicted by other documents in the record”.
Sauer responded that, even if Cook made a mistake on mortgage paper, “it is quite a big mistake”.
Roberts seemed sceptical, telling Sauer, “We can debate that.”
Paul Clement, the lawyer arguing for Cook, told the justices that the allegations against her arise from “at most an inadvertent mistake” on a mortgage application concerning a vacation property.
Trump’s move against Cook is seen as the most consequential challenge to the Fed’s independence since it was formed in 1913. Until now, no president had sought to oust a Fed official.
A Supreme Court ruling is expected by the end of June.
