Supreme Court expresses scepticism over Trump’s bid to sack Lisa Cook

US Supreme Court justices appeared sceptical of Donald Trump’s efforts to sack Federal Reserve governor Lisa Cook, as they heard arguments in a case with sweeping implications for the independence of the world’s most important central bank.

The hearing comes after Trump moved to fire Cook in August over accusations she committed mortgage fraud, which she denies. It marked the first time a US president had attempted to remove a Fed governor.

A federal judge halted the move while litigation was pending, a decision that was later upheld by an appeals court. The top US court later blocked Trump’s attempt to sack Cook until it had heard oral arguments in the case.

Several justices on Wednesday appeared wary of solicitor-general John Sauer’s arguments that the courts should not have reinstated Cook and that Trump has the power to fire her without due process.

Justice Samuel Alito, an appointee of Republican former president George W Bush, referred to the “hurried manner” in which the Trump administration was seeking to remove the Fed governor.

Justice Brett Kavanaugh, another member of the court’s conservative wing, warned a packed courtroom that the government’s position that no judicial review or process was required when firing a Fed governor could “weaken if not shatter” the Fed’s independence.

“What goes around comes around . . . Once these tools are unleashed, they’re used by both sides,” he added, pointing to the risk that they may “incentivise” presidents to “come up” with “trivial or inconsequential or old allegations that are very difficult to disprove” in an attempt to sack Fed officials.

The court’s liberal wing also challenged Sauer.

“How do you reconcile your vision of presidential discretion with a statute that was clearly designed to limit the president’s discretion” in dismissing Fed officials, Ketanji Brown Jackson asked Sauer.

She added: “I’m not sure that we have evidence here that Ms Cook is an immediate threat to the public”.

The hearing, which Fed chair Jay Powell attended, comes at a time when Trump and many of his allies have relentlessly criticised the central bank for not drastically lowering interest rates to fuel faster growth.

Powell revealed earlier this month that he was the subject of a criminal probe by the Department of Justice over a $2.5bn renovation of the Fed’s headquarters.

The Fed’s top officials can only be fired by the president “for cause” — a rarely tested term that is usually interpreted by legal scholars as gross malfeasance. 

Paul Clement, a well-known conservative lawyer representing Cook, described Sauer’s arguments as reducing “the removal restriction in this unique institution to something that could only be recognised as at will”.

Cook added in a statement following the hearing that “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”.

The Cook case has thrust the Supreme Court into one of Trump’s boldest efforts to reshape the government. It comes as America’s most powerful bench weighs in on several aspects of his sprawling agenda in his second term, from immigration to tariffs, which is raising fundamental questions around presidential authority.

The court, which is split 6-3 between conservative and liberal justices, has often sided with Trump in previous cases.

The high-profile case has drawn the attention of central bankers in the US and internationally, with former Fed chair Ben Bernanke attending Wednesday’s hearing.

Trump attempted to fire Cook, the first Black woman to serve as a Fed governor, after Federal Housing Finance Agency director Bill Pulte alleged she had claimed both a house in Michigan and a condominium in Atlanta as her principal residence on mortgage forms. 

The president “lawfully” removed Cook, whose “conduct creates an intolerable appearance of impropriety in financial matters”, the government alleged in a court filing.

Lev Menand, a professor at Columbia University, said the justices’ line of questioning on Wednesday signalled they did not think the administration had presented enough strong evidence against the Fed governor.

“A critical weakness in the president’s case that emerged is that the justices are not persuaded that the president adduced evidence, even apart from anything Cook might put into the record, tending to show gross negligence as opposed to mere negligence, which many of the justices seemed to think would be plainly inadequate,” Menand said.

Cook, who was appointed to the Fed by former president Joe Biden in 2022, has denied the allegations and has not been charged.

She “was ‘criminally referred’ by a presidential subordinate who has used his office to initiate investigations of the president’s perceived opponents, including chair Powell”, her lawyers argued in a brief. The DoJ has rejected accusations of political interference.   

The Supreme Court has allowed Trump to remove officials at independent agencies, including the National Labor Relations Board and the Merit Systems Protection Board. But the order signalled Fed officials might be subject to stronger protections.