Supreme Court casts doubt on Trump’s firing of Lisa Cook

U.S. President Donald Trump appeared to suffer a setback at the U.S. Supreme Court on Wednesday over his unprecedented firing of a central bank governor.

Supreme Court justices from the left and right asked why they should hasten such an impactful decision, citing concerns about process and the impact on the central bank’s independence and the broader economy.

Trump said in August that he would fire Fed Governor Lisa Cook, accusing her of engaging in mortgage fraud, which she denies.

Cook argued that she had not received due process to challenge the claims, which defenders of the Fed said were an excuse to allow Trump to exert more control over the banks.

Judge Brett Kavanaugh, a conservative Trump appointee, was among those sympathetic to Cook’s argument, asking: “What’s so scary about having more proceedings here?”

He later warned that the government’s interpretation of the law would “undermine or even destroy the Fed’s independence.”

By law, the president can only remove Fed governors “for cause.”

The purpose of this requirement is to protect the central bank from political pressure and enable it to formulate policy independently.

The White House claimed it had met that standard and accused Cook of filing mortgage forms claiming to own two different primary residences at the same time. Banks often offer lower interest rates on primary residences.

The Trump administration has asked the court to allow the president to remove Cook, but lower courts have blocked that move while the case is pending.

“Even if it was unintentional or a mistake, it was a big mistake,” said Deputy Attorney General D John Sauer, who defended the government.

He said such actions could undermine confidence in banks and courts must respect the president’s decision when finding reasons.

He dismissed questions about the process and noted that Trump alerted Cook to the issue on social media before formally firing him.

“There was a social media post,” he said. “And the response was contempt.”

Cook denies fraud.

In a letter to the Justice Department in November, her attorneys said the charges were based on “cherry-picked, incomplete snippets of complete documents.”

They said there was “one reference to a primary residence” on a mortgage application for an apartment in Alabama, but noted that the document also contained “truthful and more specific disclosures about the use of the property.”

“There was no fraud, there was no intention to deceive, there was no criminal conduct, and there is no basis for alleging mortgage fraud,” her attorneys wrote.

Paul Clement, speaking on behalf of Cook, said people in her position should be given the opportunity to give evidence and avoid making decisions in advance.

He said the government’s interpretation of the law would render “meaningless” the protections Congress provided by inserting a “reasonable cause” requirement.

Some justices said they shared the same concerns.

“This position—that there is no judicial review, no process required, no remedies available, and a very low threshold for cause determined by the president alone—undermines, if not undermines, the independence of the Fed,” Kavanaugh said.

The lawsuit is considered high-stakes given the heated debate over Trump’s efforts to influence the Federal Reserve to more aggressively lower interest rates to boost economic growth.

Federal Reserve Chairman Jerome Powell is among the officials expected to attend. He himself faces a criminal investigation related to cost overruns during renovations of the Fed property — which he calls “excuses.”

In other recent cases, the Supreme Court, with a 6-3 conservative majority, allowed the White House to proceed with the firings.

But it has made clear that it views the Fed as different and that the Fed is meant to set policy independently of the White House.

Several justices, including conservatives, said they were hesitant to approve Cook’s removal before the court addressed questions such as whether a mortgage application filed before Cook’s appointment met the standard for “with cause” dismissal.

“We know that the agency’s independence is very important, and that independence will be compromised if we decide these issues too quickly and without due consideration,” said liberal Justice Sonia Sotomayor. “So to me, it makes the most sense to wait until at least the lower courts consider these issues first.”

“Is there any reason why this matter should be handled with such haste?” conservative Justice Samuel Alito asked.

Judge Amy Coney Barrett, another Trump appointee, urged Sauer to explain how waiting would harm the president, noting that the court had been warned that the decision could undermine confidence in the central bank’s independence and could have dire economic consequences.

“There are risks,” she said. “Isn’t this a suggestion…that we should be careful?”