The U.S. Supreme Court today ruled that Federal Reserve Governor Lisa Cook can remain on the Fed board while a lawsuit challenging her removal by President Trump plays out in the courts. However, the court also ruled that Trump could fire board members from other independent agencies, which could have implications for the makeup of the National Credit Union Administration.
Federal Reserve
Last year, Trump announced he was removing Cook after Federal Housing Finance Agency Director William Pulte alleged that she made false statements on mortgage agreements. Cook filed a lawsuit against the administration in U.S. District Court for D.C., arguing that federal law allows the president to remove Fed governors only “for cause,” and that the claims made against her have not been investigated or proven.
A U.S. district court granted a temporary restraining order preventing Cook’s removal while it considers the case, and a U.S. appeals court upheld the decision. In a 5-4 ruling, the Supreme Court rejected the administration’s push to overturn the restraining order, finding there was not yet enough evidence to decide whether Trump could invoke for cause.
“Acceptance of the government’s position would in effect transform the Federal Reserve’s for-cause protection into at-will employment — an interpretive leap out of step with the statute Congress enacted and our nation’s tradition of central banking protected from political interference,” said Chief Justice John Roberts, writing for the majority.
Board firings
Still, the high court concluded in a separate case that the president could remove political appointees from independent boards. In a 6-3 decision, the court allowed Trump to fire two Democratic appointees to the Federal Trade Commission, who had challenged their removals as unconstitutional.
“Although it is up to the Senate to decide whether to confirm those with whom the president would prefer to work, neither Congress nor the courts may saddle him with those with whom he cannot work,” said Roberts, writing for the majority. “Subordinates who exercise the president’s power are subject to removal by him.”
Last year, Trump fired Democrats Todd Harper and Tanya Otsuka from the NCUA board. The two filed a lawsuit challenging their removals, and the U.S. District Court for D.C. ruled that the firings were unlawful. The administration appealed the decision. Today’s ruling may affect the outcome of that case.
