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SCOTUS: Fed's Cook Can Keep Job for Now06/30 06:22
WASHINGTON (AP) -- The Supreme Court on Monday dramatically expanded
presidential power, upholding President Donald Trump's firings of the heads of
independent federal agencies with one important exception: the Federal Reserve.
The justices allowed Fed governor Lisa Cook to stay in her job while she
fights the Republican president's effort to fire her over allegations of
mortgage fraud, which she has denied.
But other than at the nation's central bank, with its role of setting
interest rates, the court held that presidents have free rein to fire agency
heads at will, despite federal laws that require a cause for such dismissals
and a 91-year-old decision that had limited executive authority.
With the six conservative justices in the majority, the nine-member court
jettisoned its unanimous decision in Humphrey's Executor that had limited when
presidents can fire agencies' board members -- in part to try to ensure
decision-making free of political influence.
"We hold that such protection from removal is contrary to the separation of
powers enshrined in the Constitution," Chief Justice John Roberts wrote for the
court.
Support for Trump's position
The justices ruled in the case of former Federal Trade Commission member
Rebecca Slaughter, whom Trump fired without cause despite a provision of
federal law that requires a reason. The logic of the decision extends to other
agencies, including the National Labor Relations Board, the Merit Systems
Protection Board and the Consumer Product Safety Commission, where Trump also
has fired board members.
Trump voiced his approval in a Truth Social post. "It is such an Honor to be
the sitting President who won this Historic and Unprecedented Ruling, one of
the most important ever given with respect to Presidential Powers," he wrote.
The court already had signaled its support for the Trump administration's
position, over the liberals' objection, by allowing Slaughter and the board
members of other agencies to be removed from their jobs even as their legal
challenges continued.
No president before Trump had sought to wrest control of the agencies that
regulate wide swaths of American life, including nuclear energy, product safety
and labor relations. But at arguments in Slaughter's case in December, the six
conservatives, including three appointed by Trump, seemed more concerned about
issuing a ruling that would endure than handing too much power to Trump.
Their rhetoric was reminiscent of the presidential immunity case in 2024
that allowed Trump to avoid prosecution for his efforts to undo his 2020
presidential election loss to Democrat Joe Biden. The court is writing a
decision "for the ages," Justice Neil Gorsuch said then.
Justice Sonia Sotomayor, in a dissent she summarized aloud in the courtroom,
said the ruling could lead to "submission, instability, and even oppression."
"The president, to be sure, emerges with more power than ever before. That
power was given to him by six justices on this court, not the people or the
Constitution," Sotomayor said.
Fed governor Cook's case
In Cook's case, the court voted 5-4 to reject the Trump administration's
effort to get Cook out of her job now. Roberts, Justice Brett Kavanaugh and the
three liberal justices were in the majority.
Allowing Cook to be ousted now, Roberts wrote, "would allow the President to
remove a member of the Federal Reserve at any time, for any reason, without any
notice before, and without any judicial check after. That would turn for-cause
protection into little more than at-will employment."
Roberts did include a footnote in his opinion noting that nothing forbids
Trump from "trying again" to fire her, provided she is given proper notice and
a chance to contest it.
Trump suggested he would take Roberts up on the offer, saying on Truth
Social that "we will take appropriate action immediately to make sure that
someone who has committed wrongdoing will not be making vital decisions
concerning the Welfare of the United States of America!"
Cook, who was nominated to the Fed's Board of Governors by Biden, can
continue in her post at least as long as her lawsuit challenging her firing
goes on, the court said. The Trump administration is appealing a lower-court
ruling in her favor.
Besides trying to fire Cook, Trump had threatened to fire former Federal
Reserve chairman Jerome Powell if he didn't leave the board when his term as
chairman ended in mid-May. Powell has remained as a governor, even as Kevin
Warsh has replaced him as chairman.
Judges on lower courts have allowed Cook to remain in her post as one of
seven central bank governors.
The true motivation for trying to fire Cook, Trump's critics say, is the
Republican president's desire to exert control over U.S. interest rate policy.
If Trump succeeds in removing Cook, the first Black woman to be a Federal
Reserve governor, he could replace her with his own appointee and gain a
majority on the Fed's board. The case is being closely watched by Wall Street
investors and could have broad impacts on the financial markets and the U.S.
economy.
Cook said her case was "never about mortgage documents signed years before I
became a Federal Reserve governor."
"It was an attempt to remove me on a manufactured pretext because I refused
to bow to political pressure and continued to set interest rates based only on
what would best serve the American people. That is the most fundamental
obligation of a Federal Reserve governor," Cook said in a statement.
Trump's confrontation with the Fed
Trump has been dismissive of worries that cutting rates too quickly could
trigger higher inflation. He wants dramatic reductions so the government can
borrow more cheaply and Americans can pay lower borrowing costs for new homes,
cars or other large purchases, as worries about high costs have soured some
voters on his economic management.
The Fed has left its key rate unchanged this year, but a growing chorus of
policymakers is expressing concern about persistently high inflation and
suggesting the central bank could raise its benchmark rate by the end of this
year or leave it unchanged.
While Cook's case was under review at the high court, Trump dramatically
escalated his confrontation with the Fed. The Justice Department opened a
criminal investigation of Powell and served the central bank with subpoenas.
The investigation ended in late April, the department said. The announcement
cleared a major roadblock to the confirmation of Warsh as Powell's successor.
The case against Cook stems from allegations she claimed two properties, in
Michigan and Georgia, as "primary residences" in June and July 2021, before she
joined the Fed board. Such claims can lead to a lower mortgage rate and smaller
down payment than if one of them was declared as a rental property or second
home.
Those applications, Solicitor General D. John Sauer said in January, are
evidence of "gross negligence at best" and give Trump reason to fire her. In
any event, he argued, courts shouldn't be reviewing his decision and Cook has
no right to a hearing.
Cook has denied any wrongdoing and has not been charged with a crime.
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