Lisa Cook, a member of the Board of Governors of the Federal Reserve System. Photo / Drew Angerer, Getty Images via AFP
United States President Donald Trump said yesterday in a letter that he was firing Lisa Cook, a Federal Reserve governor, opening a new legal chapter in his efforts to reshape the government.
Here’s what to know about a president’s power to fire members of the Federal Reserve board.
Can he do that?
Congress has limited the president’s power to remove Fed officials, saying they can be fired only “for cause”, which is generally understood to mean gross misconduct.
Is there cause for firing Cook?
The Trump Administration has accused Cook of mortgage fraud, and Trump cited that as justification in his letter firing her.
Bill Pulte, the federal housing director, said he had referred the matter to the Justice Department for investigation.
Cook has not been charged with any crime, and she said last week that she had “no intention of being bullied to step down from my position”.
Many legal experts yesterday raised serious concerns with the manner of her firing, and the President’s justification for doing so.
What recourse does Cook have?
She could sue to keep her job, and a judge would then determine whether there is enough evidence to meet the “for cause” requirement.
The judge would also decide what would happen in the near term while the issue was being litigated.
Were a judge to let Cook stay in her post while the case proceeds, the Administration would almost certainly ask the Supreme Court to intervene.
Can Trump fire Cook without cause?
A 90-year-old Supreme Court precedent allowed Congress to shield the leaders of independent agencies from politics by making it hard to fire them.
Trump says that those limits are an unconstitutional check on the president’s power to control the executive branch and that he must be allowed to remove officials for any reason or no reason.
What does the leading precedent say?
In 1935, in Humphrey’s Executor vs United States, the justices upheld a federal law that protected commissioners of the Federal Trade Commission, saying they could be removed only for “inefficiency, neglect of duty or malfeasance in office”.
Despite the law, President Franklin D. Roosevelt fired a commissioner, William Humphrey.
The only reason he gave was that Humphrey’s actions were not aligned with the Administration’s policy goals. The Supreme Court unanimously ruled that the firing had been unlawful.
Is that precedent in peril?
Yes. In 2020, the Supreme Court seemed to lay the groundwork for over-ruling Humphrey’s Executor in a case involving the Consumer Financial Protection Bureau.
“In our constitutional system,” Chief Justice John Roberts wrote, “the executive power belongs to the president, and that power generally includes the ability to supervise and remove the agents who wield executive power in his stead.”
The chief justice drew distinctions between agencies led by a single director, like the consumer bureau, and bodies with multiple members, like the Fed.
On the other hand, several justices at the time said they did not think those differences were meaningful.
What has the Supreme Court done lately?
In interim rulings on emergency applications since Trump took office, the court has let him fire leaders of the Merit Systems Protection Board, the National Labour Relations Board and the Consumer Product Safety Commission without cause.
In one of those rulings, the unsigned majority opinion said Trump could remove officials who exercise power on his behalf “because the Constitution vests the executive power in the president”.
Is the Fed different from other independent agencies?
The Supreme Court seems to think so. Even as it let Trump fire two agency leaders in May, the unsigned majority opinion said the Fed may well warrant special protection.
“The Federal Reserve is a uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States,” the opinion said.
So the President can’t fire Cook without cause?
Probably not. The Supreme Court has repeatedly gone out of its way to say the Fed occupies a distinctive place in the government. Those statements were asides rather than rulings, and the court has given the green light to many other administration initiatives.
And, as Justice Elena Kagan wrote in a dissent in May, “the Federal Reserve’s independence rests on the same constitutional and analytic foundations” as those of agencies whose leaders the majority allowed Trump to fire.
This article originally appeared in The New York Times.
Written by: Adam Liptak
Photographs by: XXX
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