With Lisa Cook Ruling, Supreme Court Shields Fed from President Trump

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1:19At IBM, we've seen this firsthand. But by embedding AI across HR, IT, and procurement processes, we've reduced costs by millions, slash repetitive tasks, and freed thousands of hours for strategic work. Now we're helping companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business, IBM. Bloomberg Audio Studios. Podcasts, radio, news. In an eagerly awaited decision issued today, the United States Supreme Court ruled that Federal Reserve Governor Lisa Cook can continue to serve in her role as she fights a legal battle against the Trump administration's attempts to remove her.

2:05But in another decision dropped on Monday, the nation's top court broadly affirmed the president's right to fire top government officials, increasing the White House's control of potentially dozens of agencies that have long operated independently.

2:23This is The Big Take from Bloomberg News. I'm Sarah Holder. On today's show, Amira Amokwe, who edits Bloomberg's Fed coverage, and Bloomberg senior legal reporter Zoe Tillman, unpack what the Supreme Court's latest decisions mean for the Trump administration, the Federal Reserve, and the power of the president over other long-independent government agencies.

2:49Zoe, after weeks of waiting, we finally got Supreme Court decisions this morning on Trump v. Cook and Trump v. Slaughter. Two cases with big implications for the president's ability to fire top officials at regulatory agencies like the Securities and Exchange Commission, the Federal Election Commission, and the Federal Reserve. What just happened? What happened is that the Fed wins, and pretty much every other agency in the executive branch either, you could say, loses or now is in limbo in terms of its protections against a president coming in and removing its members. And then the final takeaway here is that Lisa Cook can stay in her job for now, but the opinion was not a full-throated defense of her ability to stay in her job forever.

3:43So you sort of had these three big takeaways that we were waiting on. These were largely expected outcomes based on how arguments went, the way the court has been leaning over the past year and a half, as it has dealt with other agency firing cases that have come up on its so-called shadow or emergency docket, where, you know, the court has, at least in some instances, backed the president and said, you know, at least while legal fights are pending until we resolve this, yes, you can remove certain members from agencies. And we expected them to treat the Fed differently. You know, how differently was the question?

4:20And what we got from the Chief Justice John Roberts today was a fairly full-throated endorsement of its independence. The central bank is special. It is different. It is independent. But in this other decision, they basically said, you know, many other so-called independent agencies are operating within, you know, the president's purview of policy. And therefore, they don't get those same protections. So that's sort of the big picture of what they did today. I want to talk more about the Slaughter decision. This is a case that stemmed from Trump's March 2025 dismissal of the Democratic FTC Commissioner Rebecca Slaughter.

4:56The court's decision today effectively overturns a Supreme Court decision from 1935, Humphreys' executor v. United States. Back then, the justices ruled unanimously that the president could not fire federal trade commissioners solely because of policy differences. And it affirmed that Congress, in some instances, can set up agencies that are independent from the executive branch and whose members can only be fired for cause, not at will. So Zoe, what's the impact of this new ruling? Right. So what the court specifically did was say that the FTC, there could not be a for-cause protection from members of the FTC.

5:36So when we talk about for-cause, meaning that there is a sort of special legal bar for what it takes for the president to fire a member of a multi-member agency like the FTC. What exactly cause is is not clearly defined. And what the court said in the slaughter case is that for an agency that is, you know, carrying out ultimately the prerogatives of the president and part of that executive apparatus, that at-will removal is appropriate because the president has a right to determine the policies of his administration and his executive branch. The conservatives said you can't have different agencies, you know, at loggerheads with the president, the chief of the executive branch when they are fulfilling these types of policy roles.

6:22And they did not say that every agency now falls into this at-will category. They sort of stopped short and they didn't offer us a comprehensive list of every agency that they would conclude is like the FTC where the president can now remove members at will. You know, they left the door open a little bit, perhaps, for other agencies to come in and argue that they are truly independent, like the Fed. But the court also raised the bar quite high. So we expect, for the most part, that at-will removal power to extend across the full pantheon of what we long considered independent agencies across the executive branch.

7:04The Fed, as you said, is being treated differently here. What was the court's rationale? Why block the Trump administration's removal of Lisa Cook, but allow the removal of the FTC's slaughter? Sure. And I should say at the outset, you know, they haven't blocked her removal. And that's something that we've tried to make clear here is that, you know, temporarily she can stay in her job for now. But what the court said is she needs notice and comment. They have to go back. They have to explain what the allegations are, what the evidence is, give her a timeline to respond, give her a chance to respond.

7:36But at some future point, should they do all of that, perhaps the president could fire her. She could, you know, go back to court and contest that. So we just want to make clear, you know, this is not a 100 percent win for Lisa Cook. But what? Blocking the temporary removal of Lisa Cook during this interim phase. Exactly. So what the court said is that historically there has been this understanding of the central bank as an institution that needs to be protected from political interference. that the fate of the U.S. economy cannot be responsive to the short-term whims of the politics of the day.

8:13And so that this is a tradition that goes far back to the founding of the country, that these are protections that Congress explicitly put in writing in the statute. They said it's a four-cause removal. As the chief said, you know, Congress knows what it does when it speaks. It could have said at-will removal. It could have said this is exempt from courts to review. It did neither of those things. So given that historical tradition of the bank's independence, the need to insulate it from political interference, plus Congress's intent in the words it used when it passed the four-cost statute, the majority said that this was enough to say that the Fed is different, is special.

8:57And Amara, can you just give us a little bit of background on the Lisa Cook investigation and the case that worked its way up to the Supreme Court? What exactly was the court weighing? Going back to last year, President Trump said last August that he was going to fire Fed Governor Lisa Cook over allegations of mortgage fraud. The allegations were related to two properties that she had purchased and how she designated both of those properties as a primary residence. And so President Trump's move to fire her came after some of his allies had basically pointed to these mortgages and said, you know, there was good reason to believe that she had committed mortgage fraud.

9:37And these allegations, by the way, are unproven, right? But President Trump kind of seized on those allegations to say that he had sufficient cause to fire her. And so Lisa Cook in turn sued and for various reasons said that her firing was illegal. that case went to the district court and then to the appeals court and then finally made its way to the Supreme Court. This had been seen as a key test for Fed independence because President Trump's move to fire Lisa Cook last year came as he and his allies put a lot of pressure on the Federal Reserve over interest rate policy. You saw the president consistently insulting and berating former Fed Chair Jerome Powell over the fact that interest rates weren't coming down more quickly.

10:19And it was just really a full-out public pressure campaign on the Fed that kind of culminated in this attempt to fire Fed Governor Lisa Cook. The outcome of this case wasn't exactly a surprise, right? During oral arguments in the case back in January, justices already were coming across as skeptical of the government's argument here. What was that skepticism about the government's case and how was that expressed in the majority opinion that we got today? So some of that skepticism had to do with how the president went about trying to remove Lisa Cook, which was posting about it on social media.

10:56The court said that is not an OK way to go about removing a member of the Federal Reserve, that that is not enough to satisfy the sort of notice and due process requirement under the law. So I think in a way, taking a bit of a swipe at how this president does policy and sometimes big policy on social media. Some of the skepticism goes back to last year when we had an order from the court that gave a pretty strong suggestion that it was going to consider the Fed differently in the face of a number of firings that the president was carrying out in other agencies. There was some language early on that said they considered the Fed different.

11:37There was also skepticism about the argument that the courts had no role to play here, that the president's power to fire was not judicially reviewable. This has been a common thread of the Justice Department's arguments in other cases throughout the past year and a half, which is trying to narrow the opportunities for judges to rule on what this president and this administration is doing. And the Supreme Court said here, you know, there is a role to play that for cause means something. It doesn't mean it can be no reason at all. And there is a role that judges can play in deciding whether there's some basic standard even of cause has been met.

12:16Zoe, taken together, what do these rulings mean for the president's ability to oust officials at will from traditionally independent agencies moving forward? Generally, it's a fairly bright green light for President Trump to continue removing members of many other agencies who are espousing ideas, policies, doing things that he doesn't agree with. The FTC case was not a lone dispute. There have been firings at many other agencies, and those cases have, you know, the government has lost many of them in the lower courts. But the writing on the wall has been that ultimately the Supreme Court would do this and overturn this key precedent known as Humphreys Executor, which had provided the legal protection for independent agency heads sort of writ large.

13:07And the court had been chipping away at that over time. So even coming into this administration, there was a sense that should the opportunity arise, the votes were there to overturn it and get rid of sort of this last line of legal shield for most agencies that had been considered independent. and where there had been this sense that there was this extra amount of insulation from the, you know, day-to-day whims of the political parties and whoever was in control of the White House. It's mostly a win for the president, except for this one institution that, as Amara said, he would very much like to have more control over, and the court had a red light for that, but a pretty bright light.

13:50Go ahead for the rest.

13:54After the break, I continue my conversation with Bloomberg Zoe Tillman and Amara Amokwe on what Lisa Cook's win in the Supreme Court means for Fed independence.

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16:06We're back, speaking about the two Supreme Court rulings today on the president's power to fire top government officials. Amira, what does the Trump-Cook ruling say about the court's view on Fed independence? Well, I think you see in what Chief Justice Roberts wrote that Fed independence is an idea that he continually came back to. He talked about the Fed having this unique historical status. He talked about the fact that if you allow a Fed governor to be fired while there's ongoing litigation, that would, in effect, nullify Fed independence. But I think it's interesting because he's also pointing out that this is a narrow ruling, right?

16:47They believe that Lisa Cook wasn't given the space to properly respond to these allegations. And they're not really taking— More of a procedural point. A procedural point, right? They're not really saying whether or not these mortgage allegations are true. They're not really defining what cause is in any kind of specific way. And so I think, you know, some Fed watchers are already saying like, yes, this is a win for Fed independence, but it's still something to watch because there are still some of these areas where Lisa Cook herself and the Fed could be vulnerable in the future. And I just want to note that the president has already posted on social media and pointing out that this was a procedural thing that the Supreme Court was talking about today and basically making it seem like they are going to continue to go after Fed Governor Lisa Cook.

17:31So I think it is seen as a win for Fed independence, but I don't think that it is case closed quite yet. You know, looking at things more broadly, this has been a commonality across legal challenges to what President Trump has done in both his first term and second term and his administrations, which is courts pushing back on how they're trying to do things as opposed to the core of what they're trying to do. that a number of setbacks have been the courts and mostly the Supreme Court saying, you need to follow the steps. There needs to be some semblance of order and routine. The court is not saying that he cannot do what he wants to do in the end.

18:13So, Amira, to what extent does this decision change how the Fed itself and the new Fed chair, Kevin Warsh, might go about doing their jobs moving forward, setting rate policy, for example? Yeah, this is such an interesting moment because this decision comes just weeks after we got a new Fed chair in Kevin Warsh. In the run-up to him being nominated for Fed chair, he expressed kind of agreement with President Trump that interest rates should come down. But then we saw in his first press conference earlier this month after the Fed held rate steady again, he came out and delivered a message that was seen as very hawkish by the markets because he expressed a commitment from the Fed to getting inflation back down to their 2 % target.

19:01And that was surprising to some people because some people thought he might come in there and, you know, have a more dovish outlook given, you know, that he was appointed by President Trump. And President Trump had made it clear that he was only going to put someone in there who wanted to lower interest rates. And we did have about half of officials at the meeting earlier this month pencil in a rate hike this year. So it could give Kevin Warsh some comfort, some flexibility in taking that more aggressive stance toward inflation. It's also interesting because these legal battles, this situation with Governor Cook and also the DOJ's former pursuit of former chair Jerome Powell, has also kind of limited the Trump administration's ability to reshape the Federal Reserve's board.

19:44So one of the reasons that former chair Powell is still at the Fed is because of these legal battles and because of these threats to Fed independence. Traditionally, when Fed chair terms are up, the Fed chair will step down. But Jerome Powell exercised his right to stay on the board for a few years longer as a governor. And that kind of denied President Trump an opportunity to be able to fill that slot with someone who maybe would be more aligned with his worldview. And so in a way, President Trump pursuing Lisa Cook, pursuing former chair Powell, kind of limited his ability to do what he wants, which is have more influence over the Fed.

20:21And that, I think, is also another sort of win for Fed independence because the people that remain have been very clear that they believe that politics should not play any role in the setting of interest rates.

20:38This is The Big Take from Bloomberg News. I'm Sarah Holder. To get more from The Big Take and unlimited access to all of Bloomberg.com, subscribe today at Bloomberg.com slash podcast offer. If you liked this episode, make sure to subscribe and review The Big Take wherever you listen to podcasts. It helps people find the show. Thanks for listening. We'll be back tomorrow.

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