Even though the Supreme Court ruled Monday, in Cook v. Trump, that the president couldn’t remove Federal Reserve Governor Lisa Cook before her employment case was resolved, the outcome may be deceiving. The close split — 5-4 — and narrow procedural nature of the decision suggests there’s still room for the case to go the government’s way if it comes before SCOTUS again, experts told TPM Monday.
“I always thought that if the Supreme Court was going to distinguish the Fed, it would have to do it in kind of a hand-wavey way,” Jeremy Kress, a former attorney in the banking regulation and policy group at the Federal Reserve, told TPM. “And I think that’s what we got in Cook. It’s not particularly persuasive or intellectually honest, but the Court clearly felt like it needed to distinguish the Fed and it did the best that it could.”
That takeaway was emphasized by a second decision Monday, Trump v. Slaughter, that the justices paired Cook with. In a ruling focused on Trump’s attempt to fire an Federal Trade Commission board member, Slaughter overturned a decades-old precedent to substantially erode protections for executive branch employees.
And while the disparate decisions which both address financial regulatory agencies, may seem contradictory, as Justice Amy Coney Barrett observed in her dissenting opinion in Cook, the limited protections the justices found for the Fed rest on a shaky foundation: the central bank’s global significance — rather than its practical difference.
In Cook, conservative Chief Justice John Roberts and Justice Brett Kavanaugh joined justices Elena Kagan, Ketanji Brown Jackson and Sonia Sotomayor in finding the government was likely to lose its retributive mortgage fraud case against Cook, and that Trump hadn’t afforded the Fed governor due process before attempting to remove her. The majority opinion also took time to heap substantial weight on the historical significance and uniqueness of the central bank as a U.S. institution. As the Court has gradually dismantled the independence of executive branch regulatory agencies, a task greatly furthered on Monday by Slaughter, individual justices have repeatedly nodded to the idea that the Fed was different. On Monday, SCOTUS officially registered that distinction.
In doing so, experts told TPM that the Cook and Slaughter decisions in tandem show that perhaps no agency is truly exempt from executive branch control. Pairing the Slaughter case, regarding the independence of the Federal Trade Commission, and ruling to grant the president power to remove leadership there, while protecting officials at the Fed, seems contradictory. What it reflects, said Cornell Law professor Robert C. Hockett, is the Court’s understanding of the magnitude of the Fed’s influence rather than the uniqueness of the Fed as an institution.
“Looking at both decisions, it seems to me we’ve a massive difference in degree being disguised as a difference in kind, hence at two somewhat pragmatic justices feeling constrained to make out that they’re dogmatic justices,” Hockett told TPM, referring to Roberts and Kavanaugh’s alliance with the liberal justices.
Monday’s decision reflects that, “even the most ideologically minded judges and justices… are more hesitant about screwing around with the Fed and letting basically a kind of random number generator like Trump F around too much with the Fed,” said Hockett.
It gives rise to a logic where executive branch agencies only receive protection if a lack of it could lead to some kind of global disaster. One additional regulatory body that might be protected by the Court from presidential meddling is the Nuclear Regulatory Commission, Hockett theorized.
“It’s not an accident that there are only two realms in public sector life where we use the term ‘meltdowns’ — financial meltdowns and nuclear core meltdowns,” Hockett said.
The court’s overturning of the nearly century of precedent protecting independent agency leadership — 1935’s Humphrey’s Executor — will impact agencies’ freedom from executive control down to who would even choose to take a politically freighted job, Erica Groshen, former vice president in the Research and Statistics Group of the Federal Reserve Bank of New York. Groshen left the Fed to become commissioner at the Bureau of Labor Statistics.
“When I was recruited to become head of the Bureau of Labor Statistics, I was told that this would be a four year appointment from which I could only be removed for cause,” Groshen said. “I don’t know what my decision would have been if I had been told, ‘We want to offer you a position where you serve at the pleasure of the president rather than on the basis of faithfully conducting your professional responsibilities and achieving the mission of the agency,’” she added.
Hockett wasn’t surprised with Roberts and Kavanaugh’s decision so much as that the decision wasn’t unanimous in favor of Cook.
Kress said the same, owing his thinking to the justices’ tones during oral arguments. That too, Kress said, is tied to the seismic significance of the U.S. central bank on the entire world market.
“I think that if Justices Thomas and Alito had been more vocal during oral arguments, the media coverage might have been, ‘Federal Reserve fate is unclear,’” said Kress. “I think that could have spooked global financial markets. Once Thomas knew he’d be in the minority, he’d be able to express his views on paper without the risk of destabilizing the economy.”
In two Truth Social posts sent after the SCOTUS decisions, President Donald Trump clocked the Court’s extreme line-towing and ultimate amenability to the unitary executive theory coming out of Slaughter and Cook.
“To show the importance of the Slaughter Case, 90 years of precedent has been COMPLETELY AND UNEQUIVOCALLY OVERRULED, greatly increasing Presidential Power at a time when it is most needed!” Trump wrote first.
On Cook, he highlighted the decision against him as coming on “a strictly procedural basis,” and then promised action that experts predicted to TPM. “[W]e 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!” Trump wrote.
The Court’s decision to remain silent on whether allegations of mortgage fraud committed before Cook’s confirmation as a Fed Governor should be grounds for dismissal will likely have negative consequences for her individual case today, and independent officials going forward.
“This was a monumental ruling for the Fed as an institution,” said Kress. “But for Lisa Cook personally, this was a very narrow reprieve and the president could try to fire her, give her notice and opportunity for a hearing this afternoon, and by tonight decide that her hearing was unpersuasive and that he was gonna fire her again.”
Cook, said former Treasury official Kitty Richards, is still very much “under threat” by Trump.
“This was a preliminary ruling that simply said that Lisa Cook could not be removed from office without any process,” Richards, a senior fellow at economic policy think tank Groundwork Collective, told TPM during a press call Monday morning. “And we’re going to see how it plays out over the coming months.”
The real work for this court going forward will be to make sure a Democratic president can’t exercise this unitary executive authority the court has made up. But, I’m sure they’ll find a way.
it won’t be too hard for them. The Democrat will have unitary authority, but every action taken by the executive’s chosen officials will be found to be unconstitutional, unauthorized by Congress, etc. They will create all kinds of distinctions without a difference to handicap Democrats in favor of Republicans.
As much as this Court wants to give the toddler-in-chief his every wish, they know enough not to give him the keys to the vault. Or at least some of them do, the 3 rational ones plus Roberts attempting to salvage his legacy and one other. But don’t get to excited this is an exception.