Lisa Cook at the Supreme Court

Lisa Cook at the Supreme Court

The Supreme Court is hearing arguments regarding the president’s attempt to fire Fed governor Lisa Cook. Fed governors are nominated by the president and confirmed by the Senate to fixed terms. A governor cannot be fired by the president except “for cause.” Prior to this president, it has been understood if there were a legitimate “for cause” then the governor would be impeached by the Senate rather than fired by the president. However, this president loves to test the boundaries of the power of the executive and “fired” Cook. The reason was an alleged misrepresentation of primary residence on a mortgage application. Mind you, the president had done exactly the same thing on two mortgage applications himself. But never mind. The allegations were that in doing so Cook (and Trump) received a lower mortgage interest rate.

When Trump’s attack dog Bill Pulte head of the Federal Housing Financing Agency produced copies of Cook’s mortgage documents, Trump “fired” Cook who, of course, ignored it all saying that the president did not have the authority to fire her. Cook actually was not being fired “for cause” but “because” the president wanted to intimidate and take over the Fed. The lower courts allowed her to stay in place while the matter was being adjudicated.

There are two issues here. The first is whether the president can fire a member of the Fed’s Board of Governors. The second is whether the governor can be relieved of duties prior to a court hearing and due process. At the Supreme Court all the justices appeared skeptical of the arguments made by the president’s attorneys. First it appeared that they all rejected the assertion that Cook could be fired and removed from office without due process. So the fact that she remained at the Fed conducting her duties while the case was being litigated seemed reasonable to the justices despite Trump’s arguments to the contrary. 

Thus, an allegation of mortgage fraud did not rise to immediate removal. Justice Alito questioned the “hurried manner” of the “firing” without a substantive review of the fraud allegations saying that Trump’s attempt to fire Cook was “handled in a very cursory manner.” Chief Justice John Roberts appeared to also rule on what constitutes “for cause.” Other justices questioned about clarity regarding due process and whether an accused could remain in position while the case was being litigated. Justice Kavanaugh worried about Fed independence and Trump’s attempt to fire Cook “at will” saying that a newly elected president could then attempt to fire all of the governors that did not support his economic objectives. 

As to the gravity of the charges, the president’s attorney said that Cook’s mortgage applications showed “deceit” or “gross negligence” and that “Even if it was inadvertent or a mistake, it’s quite a big mistake.”  He also said “The governors set interest rates for ordinary Americans all across the country. And, here, there’s the appearance of having played fast and loose or at least been grossly negligent in getting favorable interest rates for herself.” It is difficult to believe that Trump’s attorney even took his own arguments seriously and said this with a straight face. The savings amounted to only a few thousand dollars and the “crime” is rarely, if ever, prosecuted. The court rightly viewed that comment with skepticism. That such a frivolous charge would rise to the firing of a Fed governor is laughable. By the way, if this were really an impeachable offense don’t you think Al (Full of Fire) Green, Bernie Sanders and Elizabeth Warren wouldn’t be filing articles of impeachment against the president who in the words of Trump’s own attorney committed mortgage fraud himself?

Fed chairman Powell attended the hearing and was promptly criticized by Trump’s new spokesman, Treasury secretary Bessent who said of Powell’s presence, “I actually think that’s a mistake. Because if you’re trying not to politicize the Fed, for the Fed chair ⁠to be sitting there, ​trying to put ​his thumb on the scale is a real mistake.” I guess Bessent conveniently forgot that he, himself, had attended a court hearing on Trump’s tariffs. Bessent sat in the front row of the gallery during Supreme Court arguments in November about Trump’s authority to impose sweeping tariffs alongside Commerce secretary Lutnick and trade negotiator Jamieson Greer. Clearly, the administration is grasping at straws.

What’s that saying about glass houses?

I fully expect the court will be unanimous in its decision and it will be to rule against Trump specious argument.