The Supreme Court prevents Trump from being able to dismiss the Fed governor, Lisa Cook
Despite guaranteeing the independence of the central bank, the high court has issued another ruling in which it expands presidential power over the rest of the agencies
WashingtonThe Supreme Court of the United States has rejected Donald Trump's maneuver to try to dismiss Fed Governor Lisa Cook. The 5-4 vote is a setback for the US president's plans to try to break the independence of the US central bank after a year of pressure against the institution to lower interest rates. The case was one of the most decisive for the future of the Fed and the credibility of its monetary policies as a benchmark for other central banks.
If the Supreme Court justices had sided with Trump in his attempt to dismiss Cook without a firm judicial ruling, they would have opened the door for the president to depose any governor he found inconvenient with just a simple accusation. Upholding the Republican's maneuver "would allow the president to remove a member of the Federal Reserve at any time, for any reason, without prior notice and without subsequent judicial review," wrote John Roberts, the Chief Justice of the Supreme Court, who was responsible for drafting the ruling. "This would turn the protection for good cause into little more than at-will employment."
Trump tried to dismiss Cook last year with a maneuver of dubious legality: the US president claimed he was dismissing the governor based solely on accusations of having submitted fraudulent information to apply for mortgages for two residences. Trump was attempting to expand his power beyond what is stipulated in the Fed's statutes, which state that the country's president can dismiss governors as long as there is proven professional misconduct or a crime. As it stands, this is not the case for Cook, who faces only one accusation.
The ruling that shields the Fed comes just weeks after the bank's new president appointed by Trump, Kevin Warsh, took office. Nevertheless, at the Fed's last meeting – at which Warsh made his debut – the bank decided to keep interest rates frozen around 3.5% and warned of possible increases instead of cuts. A forecast that once again goes against the Republican's pressure.
Powers to arbitrarily dismiss
The Fed, however, turns out to be the exception to the precedent set by the Supreme Court in another parallel ruling this Monday. In a second case, the conservative majority gives the US president free rein to dismiss heads of other independent federal agencies and bodies at will.
In a 6-3 vote, the justices sided with Trump on the arbitrary dismissal of Rebecca Slaughter, former member of the Federal Trade Commission, despite federal laws requiring just cause and the judicial precedent of a 91-year-old ruling that had limited executive authority.
Beyond affecting the Federal Trade Commission's regulators, the decision also covers other agencies such as the National Labor Relations Board, the Merit Systems Protection Board, and the Consumer Product Safety Commission. In these bodies, Trump has also removed members of the boards of directors.
The tycoon commented on both rulings on Truth Social. The Republican celebrated the Supreme Court's hammer blow against the "Humphrey's Executor" case, which for more than ninety years had acted as guardrails on the president's ability to dismiss members of the government's independent federal agencies. "90 years of precedent have been completely and unequivocally overturned, and presidential power has greatly increased when it was most needed," Trump wrote.
Meanwhile, as expected, Trump said in another post: "We will take the necessary steps to ensure that someone who has committed fraud is not making vital decisions."
