SCOTUS Moves to the Right & Lisa Cook Firing Blocked

0:00The thing about AI for business, it may not automatically fit the way your business works. At 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. Whatever your goal, trade show giveaways, client gifts, or team gear, 4imprint has the promo products to match. With thousands of options, from apparel and drinkware to tech and totes, it's easy to find the right fit for your brand and budget, with standout choices at every price point.

0:45And with their 360-degree guarantee, you can be 4imprint certain your order will show up just right, right on time. Explore more at 4imprint.com. 4imprint. 4certain. When you're running a business, the best days are the ones where priorities stay on track. For midsize and large companies, risk can affect multiple parts of the organization at once, from property and liability to cyber and regulatory challenges. At that level, managing risk becomes an ongoing discipline. At the Hartford, the focus is on helping businesses manage risk before it turns into something more disruptive. And when losses do happen, that work is paired with insurance coverage shaped by years of underwriting, risk engineering, and claims experience.

1:27Learn more at thehartford.com slash risk mitigation. Policies provided by Hartford Fire Insurance Company and its property and casualty affiliates, Hartford, Connecticut. This is Bloomberg Law with June Grosso from Bloomberg Radio. Yesterday, a federal judge temporarily blocked President Trump from ousting Federal Reserve Governor Lisa Cook over allegations of mortgage fraud. An order that allows Cook to attend a highly anticipated Fed policy meeting next week to vote on whether to lower interest rates. Today, the Trump administration appealed that order to the D.C. Circuit Court of Appeals. Joining me is Bloomberg Intelligence Senior Litigation Analyst Elliot Stein.

2:15Elliot, Federal Judge Gia Cobb found that Trump likely violated the Federal Reserve Act and Cook's due process rights. Start by telling us about her reasoning under the Federal Reserve Act. Sure. So on that issue, she said that the for-cause standard wasn't met because even though it's not defined in the statute, based on the history and the context around its insertion into the Federal Reserve Act. It suggested strongly that cause requires some sort of event while the person is in office that can affect how they carry out their duties in that role. And in this case, she said that wasn't met because the allegations pertain to conduct in 2021 before Lisa Cook was confirmed to the Federal Reserve Board.

3:09The judge said, moreover, it would incentivize the president and subordinates to dig up prior conduct, however insubstantial to justify removal from the board, even where the board member has been up to that point, performing their statutory duties impeccably. Was that sort of a shot at What happened here, where Federal Housing Finance Agency Director Bill Pulte dug up these allegations from mortgages that Cook obtained in 2021? Yeah, yeah, I think that's a fair interpretation. And in other parts of the opinion, Judge Cobb said, you know, cause can't mean sort of vague, unsubstantiated allegations without any form of investigation.

3:53But I thought what was interesting in the opinion was that Judge Cobb did say there could be circumstances where the conduct at issue takes place before the person is in office. But then let's say that person is convicted while they're in office. Judge Cobb suggested that conviction could meet the for cause standards. So, you know, that scenario could also incentivize people to dig up dirt from years ago. So I'm not really sure that example that Judge Cobb used would eliminate the possibility of political opponents trying to dig up dirt. Did she comment at all on the explanations from Cook's lawyers that if there were any errors, she didn't mean to deceive anyone, no one was harmed, and perhaps that even this was a clerical error?

4:38She did sort of allude to that, I think, in a footnote, if I recall correctly. But that sort of goes to the due process part of the opinion, right, where Judge Cobb said that in addition to the statutory violation, there was a constitutional violation because Lisa Cook didn't get proper notice or an opportunity to be heard before she was removed. And so the judge was saying that finding out from Trump on social media was not enough? Right, exactly. Yeah, that went to the notice part of the equation. And then, you know, an opportunity to be heard also has to be satisfied. And for that, there has to be some sort of formal hearing, essentially.

5:19And Judge Cobb cited to other cases where officials were removed for cause. And there usually was some sort of formal hearing where the official could present their side of the story. Tell us a little bit about Cook's allegations that Trump's move to oust her is politically motivated. Cook's point is you can't separate the allegations against Lisa Cook from the months of accusations against Jerome Powell. And then other comments President Trump has made about trying to gain a majority on the Federal Reserve Board. And so that's the context that Lisa Cook is pointing to as to why she thinks the mortgage fraud accusations are a pretext just trying to remove Federal Reserve Board governors for policy disagreements, essentially, because even the Trump administration conceded that you can't satisfy the for-cause requirement by removing someone for a policy disagreement.

6:18So that ruling came down yesterday, and today already the Trump administration is appealing. Yep, no surprise there. No surprise, but have they stated their grounds for appeal yet? So I've only seen the notice of appeal so far. I've been trying to refresh the docket to get... As many others are. Yeah, I've been refreshing that frantically. This will go to an emergency motions panel on the D.C. Circuit. It seems from a different case where I was able to track down the emergency motions panel in that case, it seems like it'll be a favorable panel to Lisa Cook in the sense that it's a Biden appointee and an Obama appointee and then a Trump appointee.

6:58So sort of two judges that are probably going to be more sympathetic to Lisa Cook's arguments. And then from there, assuming the government loses at the D.C. Circuit panel stage, I presume the administration will go to the Supreme Court. The Fed board meeting, the highly anticipated Fed board meeting. So Cook will be able to go to that meeting if this decision is upheld. Right. Yeah, exactly. Unless this decision is stayed, she will serve at that meeting. And I do think it's possible that the D.C. Circuit Emergency Motions Panel can rule by then. And again, if it's a favorable panel to Lisa Cook, as I suspect it will be, I don't envision Judge Cobb's decision being put on hold, in which case Lisa Cook would be able to participate at that meeting.

7:45I don't think we'll get anything from the Supreme Court by the September 16th date unless the D.C. Circuit moves even faster than I think they're going to. I mean, it's possible. It's true. You know, you could get a D.C. Circuit panel ruling on, let's say, Monday the 15th and an administrative stay by the Supreme Court like the next day or even that day. So it's not out of the realm of possibility, but I still think the more important dates are in February, not next week. Because next week, Lisa Cook's only one vote out of 12, and I don't think it'll make all that much of a difference. But in February, you know, if President Trump can get a more favorable balance on the Federal Reserve Board, let's say he's able to move Lisa Cook out of her role and Stephen Miran get confirmed, as he's expected to, You know, you could potentially have a 3-3 balance on the Federal Reserve Board, three who are sympathetic to Trump and three who aren't.

8:45And at that point, you may not get the regional reserve bank presidents reappointed in February, in which case you potentially could get a shift on the FOMC in a direction that's more favorable to President Trump. And what are the odds of Cook prevailing when this does get to the Supreme Court? If. When. I think Wen is a safe bet. I mean, I think it's an extremely close case, but I do give her the slight edge. At the Supreme Court, the three justices appointed by Democrats are likely to rule in her favor because they'll be more concerned about Fed independence and be more concerned about an expansive executive authority.

9:27I think Justices Thomas Alito and probably Gorsuch are more likely to rule for President Trump. And then you have sort of the three who have now become the middle in Roberts, Kavanaugh, and Amy Coney Barrett. And, you know, at that point, Lisa Cook needs to get two of them. And I think she has a pretty good shot at that. Justice Kavanaugh in the past has written in opinions concerning the four-cause removal restriction that he's hinted strongly that the Fed is different from other agencies, similar to what the Supreme Court said in May in the Wilcox decision. and given that they do seem to distinguish the Fed from other agencies, they have to give some sort of effect to the for-cause removal restriction so that it's not rendered meaningless.

10:14And with that in mind, I think they probably would agree with parts of Judge Cobb's decision that the for-cause removal restriction has to mean something and that the mere allegations here didn't meet it. And Elliot, has the Fed made any more statements since the judge's decision?

10:59the Federal Reserve Board from effectuating President Trump's termination letter. So, you know, I don't think the Fed has to say anything other than simply abide by the decision. So we'll see now how fast the D.C. Circuit emergency panel acts. Thanks so much, Elliot. That's Elliot Stein, Bloomberg Intelligence Senior Litigation Analyst. Coming up next on the Bloomberg Law Show, later this month, Chief Justice John Roberts celebrates 20 years being the chief. And in that time, the Roberts court has moved far to the right, changing the law in areas from abortion and guns to race and presidential power.

11:42I'm June Grosso, and you're listening to Bloomberg. Whether you're planning a big tech event, launching a new campaign, or just stocking up on team gear, finding the right promotional products makes all the difference. 4imprint offers thousands of options, from on-trend apparel and premium drinkware to tech, totes, and giveaways, so you can find the right fit for any audience, purpose, or budget. You can customize it all, your logo, your message, your look, and many items come with no setup charge to help you save. And if you're really watching the bottom line, you'll find standout choices at every price point so you can make a real impact while staying on budget.

12:18Plus, you'll get expert help, fast turnaround times, and their 360-degree guarantee. So you can be 4imprint certain your order will arrive on time and look exactly right. Whatever your goal, 4imprint makes it easy to find your perfect promo match. Explore the possibilities today at 4imprint.com. 4imprint. 4certain. Support for this show comes from public.com. If you're actively involved in your portfolio, you probably catch yourself repeating the same actions. Buying the dip, manually sweeping idle cash, putting on a hedge. On public, you can now create AI agents that handle all these tasks on your behalf.

12:55Just describe what you want to do in plain English. Like, if the VIX hits 25, buy a put option on the S &P 500. Or, if my cash balance goes above$20 ,000, move the excess into my direct index. You approve of the workflow and your agent handles the rest. Monitoring the market, watching for your conditions, and executing your strategies exactly as defined. An investing platform driven by your intent, not just your clicks. You can also get full read and write access to your account via the public API. Go to public.com slash market and fund your account in five minutes or less. That's public.com slash market.

13:33Paid for by Public Investing. Brokered services by Open to the Public Investing, Inc., member FINRA and SIPC. Advisory services by Public Advisors, LLC, SEC Registered Advisor. Complete disclosures available at public.com slash disclosures. Ask yourself, what are your best people spending their time on right now? Expense reports, receipt chasing, month-end close that takes weeks. You become what you spend on, and that's not what you're building toward. Brex is the intelligent finance platform that eliminates that work before it starts. AI agents that handle the manual stuff automatically, so your team can spend their time on what actually compounds.

14:12It's time to get Brex AF. Learn more at brex.com slash AF. Chief Justice John Roberts famously compared judges to umpires during his confirmation hearings in 2010. Judges are like umpires. Umpires don't make the rules. They apply them. The role of an umpire and a judge is critical. They make sure everybody plays by the rules, but it is a limited role. Nobody ever went to a ball game to see the umpire. Now, 20 years later, looking at the court's decisions under Robert's stewardship, just applying the rules in a limited role doesn't seem to have been the practice of the Roberts court. With its conservative majority and now supermajority, the court has changed the law on abortion, gun rights, religious rights, race, agency authority, and presidential power, overturning precedent along the way and moving more and more to the right.

15:17My guest is constitutional law professor Eric Siegel of Georgia State University. Let's start with the court itself. Is the Roberts Court the most conservative Supreme Court in our history? You know, it is challenging to compare across decades. And also, I think, to some degree, what is conservative is in the eye of the beholder. It is certainly the most conservative court of my lifetime, which is 67 years. You know, if I was living in 1934, I would be very mad at the Supreme Court if I was a liberal or a progressive. They were really mad at the Supreme Court, so much so that FDR went on the biggest media of the day and said we have to save the country from the court and save the Constitution from the court.

16:06So it's a little difficult for me to say liberals and progressives today are angrier than liberals and progressives were in 1934 when the New Deal was a catastrophe for America. It is certainly as conservative as any court, I think, in American history. Roberts famously said during his confirmation hearing that judges are like umpires. Umpires don't make the rules. They apply them. Has he behaved like an umpire? Well, Justice Kavanaugh repeated that years later as well, despite the mockery and laughter of virtually all court watchers, pundits across the political spectrum on that statement by Justice Roberts.

16:46They're not umpires. They've never been umpires. In 1857, Congress wanted to end slavery in the territories. Congress had the power to do that under the Constitution. The court made up a new rule and said no. From 1900 to 1936, the court struck down hundreds of laws about minimum wages, overtime rules, labor conditions. The Constitution allows Congress to do that. The court wasn't playing like an umpire. And I think conservatives would fairly say that cases like Roe versus Wade were not the justices acting like umpires. So, no, it was a silly statement when he made it. It was even sillier for Justice Kavanaugh to repeat it during his confirmation hearing.

17:24The Constitution is a very vague document when it comes to litigation. There are some specific things. The president has to be 35, two senators from every state. Inauguration day is January 20th, which, by the way, is too long from November. You know, but we don't litigate those clauses. We litigate due process, equal protection, cruel and unusual punishment, unreasonable searches and seizures and so on. It'd be like saying to an umpire, you get to decide what's fair in a baseball game. That's not what umpires do in baseball. They have some discretion, of course. We've told the Supreme Court, in effect, make the constitutional rules for America, and that has nothing to do with sports.

18:02There are a lot of areas where the Supreme Court has changed or reshaped the law. Most people know about abortion rights and gun rights. But how has the court changed the law around race? And what's been Roberts' role in changing the rules? Other than the presidential immunity decision in Trump versus United States, which almost no legal scholars predicted, liberal, moderate, or conservative, and is one of the worst opinions in Supreme Court history, in my opinion, and many others. Leaving aside that opinion written by Justice Roberts, I think he's done the most damage to America when it comes to race.

18:40And it started in its very first term when the cities of Seattle and Louisville, let's take Louisville for a minute, you know, Louisville had segregation under the law for many, many years. those schools were still segregated. So at the very local level, students and teachers and parents and school board members and voters got together and came up with a very limited plan to make sure that the public schools in Louisville had some minimal degree of desegregation so that white kids and black kids in Louisville could go to school together. And no judge ordered this. This was voluntary. And in his very first term, the Roberts court struck that down.

19:22And that's when Justice Roberts said the famous line, the way to stop discrimination based on race is to stop discriminating based on race. In the context of Louisville, Kentucky, which discriminated on the basis of race legally for a century, that's, in my opinion, a very bizarre statement. And even Justice Kennedy, who was the fifth vote in that case, disagreed with that statement. So it started there. Everybody knows that Justice Roberts does not like voting rights. As a young attorney in the Reagan administration in 1981, he wrote some scathing things about the Voting Rights Act. And then, of course, in Shelby County v.

19:56Holder, he was able to concoct a new rule that Congress can't treat different states differently without a strong reason and struck down a law that was passed by a unanimous Senate and signed by a Republican president. That law was struck down, And then the very next day, Texas and North Carolina passed voting rules they could not have passed prior to that law being struck down. They've also interpreted the Voting Rights Act very narrowly. And I think this next year, even more narrowly again. And then, of course, there's the affirmative action case, which overturned 50 years of precedent and said colleges and universities are not allowed to use race at all in their admissions process.

20:34It's as if Justice Roberts thinks America started in 2006 when he became chief justice, or maybe 1981 when he was attorney for the Justice Department, and race was never a problem in this country. It's as if he thinks we can just snap our fingers and all of our racial divisions will go away when all the data shows that black Americans today economically are really not any significantly better off than they were 20, 30, 40, 50 years ago in our justice system. is infected with racism. And Justice Roberts has really turned a cold shoulder to dealing with those problems. You mentioned presidential immunity and that decision, which I agree, no one predicted, and which was written by the chief justice.

21:21How has it changed the powers of the president? I'm teaching that case tonight. And I had a little bit of a new observation this morning about that case. It's a little bit wonky, but some people remember that a Supreme Court with nine Democrats in 1952 told a Democrat president, Harry Truman, that he couldn't seize the steel mills in time of war. That's nine Democrats. Six of them voted, you can't do that, Mr. President. And he said very serious things about why he wanted to do it. And in that case, there's a famous opinion by Justice Jackson, again, a little bit wonky, but not really, where he divided these kind of cases into three categories, where Congress tells the president he can do something, where Congress tells the president he can't, and a twilight zone in between.

22:07Now, on Justice Roberts' immunity decision, it occurs to me that he thought he was doing something statesman-like. That case had three buckets, and that case is still good law for official action, and that case is known as one of the most important cases in separation of power history. Justice Roberts divided presidential immunity into three buckets as well. For actions that he takes in his core executive functions like commander-in-chief, he's absolutely immune from future criminal prosecution. For unofficial conduct, private conduct, he has no immunity at all. If he goes out to a bar, drinks and punches somebody, he has no immunity.

22:43For things that are in between that, where Congress has authorized him to act or we're not sure if he has the authority, He has a strong presumptive immunity, but that will depend on the facts. It's three categories. And I think he is trying to mirror what Justice Jackson, a very popular justice among all people, liberal, conservative, and moderate, was trying to do. And if he had stopped there, I think we all would have said, okay, that kind of makes sense. But he didn't. They added two wrinkles, and this was five justices. Amy Coney Barrett did not agree with this. He said, how do we distinguish between official conduct and unofficial conduct?

23:19And what he said was two things. You can't question motives and you can't use obviously official acts to prove unofficial acts. Those two evidentiary rules make the president effectively immune from prosecution. Real quickly, if the president and the attorney general are walking down the street and they see Siegel walking down the street and they say, you know what? He's a national security risk. and a president takes out his gun and shoots me in cold blood. After he retires from the presidency, they prosecute him for murder. His motive for shooting me cannot be examined. So when he says, I did it for national security reasons, we're done.

23:58The attorney general might testify, that's not why he did it. He doesn't like Siegel. That testimony doesn't come in because testimony about the evidence that he has with his advisors about any kind of conduct is basically an All of that, that's a long way of saying, puts the president above the law. And there is no effective way to criminally prosecute a president unless the conduct, well, even if the conduct is unofficial, he's going to say he had an official reason for doing it, and we're not allowed to talk about his motive. That's what confused everybody. And that's a real problem going forward.

24:32I was shocked the other day when an interviewer asked Justice Amy Coney Barrett, who's doing her book tour. If the president ordered SEAL Team 6 to kill a political rival, would that be immunized by the Trump decision? Now, in any sane world, the answer would be, of course not. The president can't go around ordering the SEALs teams to kill his political rivals. And so she should have said, of course not. But what she said was, I don't know. And that's the country we're living in right now. And that's the effect of the immunity decision. And that's just really a shame. And looking at the emergency docket or the so-called shadow docket, the Supreme Court has sided with the administration in almost all the emergency cases since January on everything from mass federal layoffs to banning transgender people from the military to lifting restrictions on immigration stops.

25:29even though administration officials have been so critical of federal judges and went so far as to sue the entire bench of federal judges in Maryland? I don't know what's happening. It is my view that Supreme Court justices are and have always been ideological. If you had life tenure and effectively unreviewable power, if you got four of your committee members to agree with you or court members, you would impose your ideology. And so would I. We felt strongly about that. But the court has not always been partisan. The Casey decision, which affirmed Roe versus Wade, had seven Republicans. I just mentioned that a court with nine Democrats told a Democrat president you can't do something during time of war.

26:16So the court's always been ideological but not partisan. The Roberts Court, from the very beginning, its overwhelming ideological value is partisanship. They want to help the Republican Party. And almost everything they've done can be explained if you see the court through the lens of an institution that is trying to help the Republican Party. And so this doesn't surprise me at all what's happening. Some of us thought maybe because Donald Trump was president, the court would be less partisan than it has been. If anything, it's been more partisan this time around without giving us reasons. As Professor Steve Vlodek has repeatedly pointed out in his book, The Shadow Docket and other places, they don't give us reasons for many of these decisions.

27:00And we must remember, three of these people represented George Bush during Bush versus Gore. They all came up to core Republican Party ranks. And I will say the three Democratic nominees also favor Democrats. But usually there's a balance of values between partisanship and personal ideology. Justice Kennedy famously voted for gay rights. Justice O 'Connor kept affirmative action alive. Justice White, a Democrat, voted conservative many, many times. These justices are Republicans first, foremost, and almost always, which doesn't mean Republicans always win because the court sometimes wants to throw people a bone and also because on little issues, they might disagree with the Republican Party platform.

27:43But on all the big issues, this is the Republican Party. Coming up next, is Roberts really an institutionalist? This is Bloomberg. Whether you're planning a big tech event, launching a new campaign, or just stocking up on team gear, finding the right promotional products makes all the difference. 4imprint offers thousands of options, from on-trend apparel and premium drinkware to tech, totes, and giveaways, so you can find the right fit for any audience, purpose, or budget. You can customize it all. Your logo, your message, your look. And many items come with no setup charge to help you save. And if you're really watching the bottom line, you'll find standout choices at every price point so you can make a real impact while staying on budget.

28:23Plus, you'll get expert help, fast turnaround times, and their 360-degree guarantee. So you can be 4imprint certain your order will arrive on time and look exactly right. Whatever your goal, 4imprint makes it easy to find your perfect promo match. Explore the possibilities today at 4imprint.com. 4imprint, 4certain. Support for the show comes from public.com. If you're actively involved in your portfolio, you probably catch yourself repeating the same actions. Buying the dip, manually sweeping idle cash, putting on a hedge. On public, you can now create AI agents that handle all these tasks on your behalf.