Trump's move to fire Federal Reserve Governor on social media comes under Supreme Court's scanner
With President Donald Trump mounting an alleged campaign to control the Federal Reserve with investigations and termination threats, the Supreme Court is considering putting a major check on his powers. On Wednesday, the court is hearing arguments in the case of Trump firing Federal Reserve Governor, Lisa Cook, over social media and weighing if he had the authority to do so. As per Reuters, justices may focus on the president's flamboyant use of social media to take the unprecedented action.
While Trump's use of social media is well-established, the case tests the limits of it, especially in his campaign to control the central bank’s independence. While he has mostly used his own platform, Truth Social, to voice his opinions and announce policy decisions, on August 25, last year, he posted a letter to Cook informing her that she was "hereby removed" from the role of Fed governor, a move that no president has made since the founding of the central bank in 1913. Cook's lawyers argued that the move violated her rights under the Fifth Amendment of the U.S. Constitution, which provides that no person may be "deprived of life, liberty or property without due process of law," Reuters reported.
Appointed in 2022 by former President Joe Biden, Cook, the first Black woman to serve as a Fed governor, came under fire over allegations of mortgage fraud made by Federal Housing Finance Agency Director Bill Pulte, a Trump appointee. She denied all allegations and, in turn, sued the president, arguing the law only allows members to be dismissed "for cause." This is at the heart of the dispute, as what constitutes "cause" is not defined in the Federal Reserve Act, and it is unclear whether the president is required to present Cook with a formal notice and opportunity to defend herself in a hearing before removal. However, Cook hasn't been charged with a crime.
"The Court has to tell us what a fireable offense looks like for members of the Federal Reserve Board," Lev Menand, an economics law scholar at Columbia Law School and former Treasury Department official, told ABC News. "But it can't be just whatever the president says it is," he added. The landmark case is the latest development in Trump's alleged campaign against the Fed's independence after the Department of Justice summoned the central bank's chair, Jerome Powell, over his mishandling of the renovation of the bank's buildings.
Previously, in a decision in late May, the high court suggested that Federal Reserve board members, including Fed Chair Jerome Powell, were protected from being fired by the president. In the case, the court allowed the president to fire other members, including the ones on the National Labor Relations board, but stated that the Fed was “a uniquely structured, quasi-private entity” with a “distinct historical tradition," Yahoo Finance reported. However, last month, justices heard arguments in a case over Trump's efforts to remove Rebecca Slaughter, a Democratic appointee to the Federal Trade Commission, which is also congressionally formed like the Fed. As per the publication, the high court signalled that it's ready to rule with a 6-3 conservative majority to strike down a federal law that limits the president's authority to fire members of the FTC.
More on Market Realist:
Bank of America CEO reveals why the Fed should be independent: 'The markets will punish people'
Trump's bid to control US Fed might lead to 'fiscal dominance' — and that's not good news
Even senators from Trump’s own party have a problem with his probe into Jerome Powell
