President Trump has asked the Supreme Court to uphold his firing of Lisa Cook, setting up a high-stakes case on executive power, the AP reported.
There is a good chance that the top court will side with Trump and reverse the D.C. Circuit's 2-1 ruling that allowed Cook to stay, for now.
Cook has been credibly accused of mortgage fraud by filing contradictory applications claiming two different homes as her primary residence, simultaneously.
The Federal Reserve Act states that the president may remove Fed governors "for cause," and the Trump administration says that the appearance of disreputable conduct by Cook is more than enough to satisfy that standard.
In its appeal to the Supreme Court, the Trump administration lamented the lower courts' intervention as another case of "improper judicial interference with the president’s removal authority."
A Biden-appointed district judge, Jia Cobb, blocked Trump from firing Cook because the alleged fraud occurred before she joined the Fed. The administration says the misconduct, regardless of when it happened, "indisputably calls into question Cook’s trustworthiness and whether she can be a responsible steward of the interest rates and economy.”
An appeals court ruled against Trump, with US Circuit Judge Gregory Katsas, a Trump appointee, dissenting. The other two judges who sided with Cook are Biden appointees.
In his opinion, Katsas noted the absurd consequences of the district court's logic, which would prevent the removal of a Fed governor who “committed murder before taking office” or who “bribed a Senator to ensure confirmation.”
“The president plainly invoked a cause relating to Cook’s conduct, ability, fitness, or competence,” Katsas wrote. “The allegations against Cook could constitute mortgage fraud if she acted knowingly, and that is a felony offense."
Another issue in the case concerns due process.
Judge Katsas rejected Cobb's claim that Cook has a property interest in her job that entitles her to special procedural protections. "As a principal officer of the United States,” he said, “she serves in a position of public ‘trust’ that creates no property rights.”
The Trump administration adopted Katsas' logic, drawing a distinction between lower-ranking civil servants and Senate-confirmed "principal officers" like Cook who do not receive the same due process protections.
“The lower courts’ primary theory,” wrote Solicitor General John D. Sauer, “is that principal officers are akin to teachers or lower-level civil servants and can thus claim a property interest and an entitlement to notice and a hearing before removal. This theory,” he contended, “is untenable and would wreak havoc on sensitive presidential decision-making.”
The Supreme Court has been broadly sympathetic to Trump's view of executive power, allowing him to fire various heads of independent agencies.
On the other hand, the court did briefly note earlier this year that the Fed has a "unique" structure.
If the president can appoint Fed governors, but not fire them over credible wrongdoing, then the Fed answers to nobody. It seems doubtful the Supreme Court would approve such a blatantly unconstitutional scheme, but we will just have to see what they decide.
