SCOTUS Not Likely to Allow Trump to Fire Fed's Lisa Cook

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1:28derivatives, which could increase risks and volatility. Monthly income is not guaranteed. Prepare by BlackRock Investments, LLC. This is Bloomberg Law with June Grosso from Bloomberg Radio. No president has fired a sitting governor in the 112 year history of the Fed and Supreme Court justices across the ideological spectrum suggested they're unlikely to permit Donald Trump to be the first president to do so. High among the justices concerns about Trump attempting to fire Federal Reserve Governor Lisa Cook over unproven mortgage fraud allegations was that it would upend the Fed's independence and rattle the markets.

2:12Justices Brett Kavanaugh and Amy Coney Barrett, both Trump appointees, posed skeptical questions to the Solicitor General. But on that, your position that there's no judicial review, no process required, no remedy available, very low bar for cause that the president alone determines, I mean, that would weaken, if not shatter, the independence of the Federal Reserve that we just discussed. Justice Sotomayor brought up the public interest here, and we have amicus briefs from economists who tell us that if Governor Cook is, if we grant you your stay, that it could trigger a recession. How should we think about the public interest in a case like this?

2:58Both Cook and Federal Reserve Chairman Jerome Powell sat through nearly two hours of oral arguments in the PAC courtroom today. The issue before the court is whether Cook can stay on the job while her challenge to the firing plays out in the lower courts. That's a high bar and includes a showing of irreparable harm to the president, which several justices like Ketanji Brown-Jackson indicated there was no evidence of. So the question is, to what extent do we believe that the president or the public is harmed by allowing Ms. Cook to remain in her position for the pendency of this case. I'm not sure that we have evidence here that Ms.

3:47Cook is an immediate threat to the public. My guest is an expert in constitutional law, David Super, a professor at Georgetown Law. David, if you just go by the oral arguments, did it seem like there were at least five justices who would vote to keep Lisa Cook in her job while the litigation plays out. I think so. The government's lawyer faced pretty tough questioning from seven justices, and it only takes five. Explain the for-cause requirement in the Federal Reserve Act. Certainly. The Federal Reserve Act creates the Board of Governors, allows the president to appoint people to that board with Senate confirmation and provides that once appointed and confirmed, they cannot be removed except for cause.

4:41That effectively means that they must do something wrong or fail to do their jobs in order to be removed. It's not just up to the president to fire them anytime he wants. He can fire his chief of staff anytime he wants, But members of the Federal Reserve Board, he has to have a good reason, a cause to do it. In general, you mentioned seven justices seem to have problems. Can you quantify or describe what the nature of their concerns were? Well, there's a lot of niceties in this case, but what it comes down to is whether the Federal Reserve will be independent, whether it will exercise its enormous powers based on best expert judgment and the directions given by Congress, or whether it will be just a tool of the sitting president who can use it irresponsibly to advance his political fortunes.

5:38So Lisa Cook first argues that she was entitled to formal notice and a chance to defend herself before Trump fired her. The Solicitor General seemed to be facing a lot of skeptical questioning about the idea that Trump's social media posts qualified as formal notice. And then Amy Coney Barrett said, why are you afraid of a hearing? It wouldn't be that big of a deal for Trump to give her a face-to-face meeting. Did you find a lot of skepticism on the justices' part that there was notice here? Certainly. Social media, particularly one's own personal social media platform, is not a conventional way of giving notice.

6:19It's a way of doing public politics. The solicitor general actually went even farther than you say and suggested that the failure of Dr. Cook to tweet back at Trump should be held against her, should be held as an admission that what Trump said was true. If I was held responsible for every tweet I ignored, I would be in a very bad way. Was there any argument that she had a hearing? No, there was no hearing. There was no pretense of a hearing. And the argument that the Solicitor General was forced to make is that she got the equivalent of a hearing in public in getting adverse social media posts from Trump and not responding to them.

7:09That's an argument that even some most conservative justices seem to have a great difficulties following. She also argues that Trump's reasons for firing her, this mortgage fraud allegations that she has denied, don't qualify as cause. What did you hear from the justices on that, the cause requirement? Well, there was less clarity as to what they were thinking about that, at least my take on the argument. There are some statutes that provide considerable detail as to what is caused. this statute isn't really one of them. And some justices, particularly Justice Thomas, seem to be thinking that that difference between this and other laws means that anything that Trump says his cause is good enough.

8:03But there were other justices that seemed responsive to the notion that if the president can just make up any old cause he wants, that there is effectively no independence for the Federal Reserve. And I think that the extreme nature of the argument here that the solicitor general had to make is going to bite them. The essence of Dr. Cook's argument is all this information was available before I was appointed and confirmed. Congress could have taken that into account in deciding whether to confirm me. They didn't. And the good cause requirement is supposed to relate to something one does on the job.

8:47I didn't have this job when I sought those mortgages that Trump is saying are improper. Yeah, I mean, there wasn't, the veracity of the allegations isn't really before the court, is it? There was little discussion of it, although the chief justice talked about it a little bit, saying, suppose it was an inadvertent mistake contradicted by other documents. And he also asked Cook's lawyer about the evidence that this was at most an inadvertent error. I mean, are the justices going to go there, do you think? Well, the justices have several ways of dealing with this. If we assume, which after argument I think we can, that a majority of the court does not want a highly politicized Federal Reserve and needs to find some way of keeping Dr.

9:36Cook on the board, they've got several ways to go. They can say that the hearing was improper or the absence of a hearing and the notice was improper. They can say that something that happened prior to her taking the job doesn't count as good cause. They can say that the lower courts need to look into the merits of this. Or, and this is something Justice Barrett seemed interested in, they can and simply say that President Trump is not suffering any legal injury from having Dr. Cook continue to serve, and therefore he simply doesn't qualify for a stay of the lower court's injunction. Yeah, so I mean, the Supreme Court doesn't have to definitively resolve whether Trump can fire Cook.

10:27The issue is whether she can stay on the job while her challenge to the firing plays out in the lower courts. That's a high bar, isn't it? And includes what you've referred to, irreparable harm. So, you know, where's the irreparable harm to Trump? Well, we have gotten accustomed over the last year to the Supreme Court finding that any potential impairment of President Trump's powers is an irreparable injury. But if I ask you to go way back in time, one year, that was very extraordinary. And getting the Supreme Court to intervene in lower court cases was very difficult throughout most of this country's history.

11:06So perhaps the court will revert to that and say, we shouldn't get involved until this gets fully aired out in the lower courts. Also, you know, talk about pushing the boundaries. John Sauer, the Solicitor General, said that the courts shouldn't be allowed to review presidential firing decisions, even if there's a for-cause requirement. And the chief justice at one point said, why waste our time? If your position is we have no authority, why waste our time? And even Justice Alito expressed concern the administration had handled this in a cursory manner. Are the mortgage applications even in the record in this case?

11:45So, you know, it seemed like that was going too far for most of the justices, even the conservatives? I think so, because the Solicitor General's position is that the courts can't look at this. And if the president can fire a Federal Reserve governor based on anything the president makes up, and no matter how absurd and unfounded it is, it can't be reversed, then effectively there is no for-cause requirement in the Federal Reserve statute, and these people all serve at the pleasure of the president. Many, many economists across the political spectrum believe that losing the independence of the Federal Reserve would, in the long term, reduce investment and increase inflation in this country.

12:34Coming up next on the Bloomberg Law Show, I'll continue this conversation with Georgetown Law Professor David Super. We'll look at some of the different ways the court could rule in the case And a sort of warning from Justice Kavanaugh that what goes around comes around. I'm June Grosso, and you're listening to Bloomberg. Support for the show comes from Public. Lately, it feels like there are two types of investing platforms. Some are traditional brokerages that haven't changed much in decades, and others feel less like investing and more like a game. Public is positioned differently. It's an investing platform for people who are serious about building their wealth.

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14:30It's a practical choice for road trips, quick getaways, and everyday travel that keeps things simple without sacrificing comfort. And when you're a Sonesta Travel Pass member, Staying at America's Best Value In means earning points toward free nights, upgrades and more every time you stay. Go to Sonesta.com to book your stay and unlock the best rates with Sonesta Travel Pass. Here today, Rome tomorrow. Join now at Sonesta.com. Terms and conditions apply. The Supreme Court seems inclined to keep Federal Reserve Governor Lisa Cook in her job as her lawsuit against President Trump for firing her goes forward in the lower courts.

15:09The case against Cook stems from allegations she claimed two properties in Michigan and Georgia as primary residences in mortgage applications before she joined the Fed board. Cook has denied any wrongdoing, and Justice Ketanji Brown-Jackson pointed out the lack of evidence against her during oral arguments today. When an allegation is made about someone's misconduct or whatnot, there's an opportunity for that person to present evidence, for the other side to present evidence. And even if the president was the final arbiter of this, one would expect that he would do so on the basis of evidence.

15:47So what I'm trying to understand is what is the evidence that has been presented and considered with respect to Ms. Cook's alleged misconduct. Cook contends that even if the mortgage allegations were true, that isn't grounds for firing her for cause. She also argues that she should have been given notice and an opportunity to contest the allegations. And several of the justices question the Solicitor General about why the administration was reluctant to give her that opportunity. Here are Justices Amy Coney Barrett and Brett Kavanaugh. Okay, so there's the truth social post and then, you know, burden on her to come back in five days.

16:30I understand that's your position. But, you know, Justice Gorsuch posited sit down across the table in the Roosevelt Room, where the president provides Ms. Cook, Governor Cook, with the evidence and waits to hear what her response is, gives her a chance to defend herself. I mean, it just wouldn't be that big a deal, it seems, if that's enough. And what's the fear of more process here in the sense that process protects you in the sense of helping you make better, more accurate decisions? And it helps process helps you then convince people on the outside that you've made a considered thorough, appropriate decision.

17:08What's the concern about more process? I've been talking to Georgetown Law Professor David Super. David, Justice Amy Coney Barrett, right at the start of the arguments, talked about amicus briefs from economists. She said, we have amicus briefs from economists who tell us that if Governor Cook is fired, that would trigger a recession. And then there was a discussion about the stock market, where she didn't want to talk about the stock market, but that was Sauer's answer to that. So I thought it was interesting that, you know, she was referring to the out-of-court briefs from economists to show, you know, the big picture concern.

17:43Well, the elephant in the room is the copious evidence that non-independent central banks are very bad for countries' economies. You can look at Russia, you can look at Turkey, you can look at other countries that do not have independent central banks, and they have enormous economic trouble as a result. The justices know this, and even if philosophically they'd like to let Trump have his way, I think they don't want to be blamed for throwing the economy into a recession. And to her credit, Justice Barrett put that out on the table and gave the Solicitor General the opportunity to respond. He didn't do much with it, but she gave him a chance.

18:27Was there an argument from the Solicitor General that resonated with any of the justices? Well, the biggest advantage that the president has in this case is that the Supreme Court is pretty clearly going to strike down security of tenure requirements for the vast majority of executive branch officials. That's the Trump versus slaughter case. An oral argument on that made pretty clear that the court is going to overrule Humphrey's executor and allow the president to fire at will members of even very sensitive boards like the Federal Trade Commission. So the question here has always been, can the Supreme Court find a way of differentiating the Federal Reserve from the Federal Trade Commission and all those others?

19:18And that's, I think, what the Solicitor General was trying to go with here is to suggest that the court should just treat this case like any other. Once you look at the specifics, the accusations against her fall apart in your hands. She was obviously given no hearing. And as several justices, including Justice Kavanaugh, pointed out, if you allow the president to make up anything and call it cause, then you have effectively ended the Fed's independence. And that makes them very nervous. Justice Kavanaugh was also looking at the big picture when he talked about basically what goes around comes around.

20:01Let's talk about the real-world downstream effects of this, because if this were set as a precedent, it seems to me, just thinking big picture, what goes around comes around. All the current president's appointees would likely be removed for cause on January 20th, 2029, if there's a Democratic president, or January 20th, 2033. and then we're really at at-will removal. So what are we doing here? Yes. I mean, if one believes, as I do, that President Trump's time horizon here is very short and he wants what he thinks is good for him right now and doesn't care about the long-term impacts, then that's of no concern.

20:51But the whole reason we have the Supreme Court with life tenure is so that they can look at the long-term. They could look at the long-term impact on the law and the long-term impact on the economy. And that, I think, is where a court that is generally very sympathetic to President Trump's agenda starts getting extremely nervous. Would you say that, along with the tariffs decision, this is one of the most important decisions of the term as far as expanding presidential power? Well, these two plus the Federal Trade Commission case, but I think everyone believes that case is going to expand presidential power radically.

21:31So people, I think, are not spending as much time thinking about that since they feel they already know how it's coming out. Do you think the administration launching a criminal investigation into Fed Chair Powell damages its chances for a win in this case? Because it tends to show that Trump is trying to reshape the Fed rather than just firing one person over unproven allegations. Yes, I think that is certainly in the back of the justices' minds. Chairman Powell sitting there in the courtroom watching all of this. So obviously, if they needed any reminding, he was there in the flesh. I don't know why they thought that was a good idea, particularly timed when they did it, and particularly against someone like Chairman Powell, who was appointed by President Trump and is pretty widely approved of across the political spectrum, particularly among his fellow Republicans.

22:33That strikes me as a remarkably ham-handed and tone-deaf thing to do. I wouldn't like the administration's chances in this case, even without the Powell investigation, but they basically gave the court no room to pretend that a ruling against Dr. Cook is compatible with an independent fed. There were quite a few points of laughter during the arguments while Lisa Cook's attorney, Paul Clement, was arguing he's the former solicitor general who is one of the premier Supreme Court litigators. This is his fifth argument since October before the justices. There seems to be something with Clement. I don't know how to explain it.

23:19Sort of a camaraderie with the justices. It's more of a back and forth rather than skeptical questions? Yes. Former Solicitor Clement is an extraordinarily skilled lawyer in general and Supreme Court practitioner in particular. But he's also extremely conservative and is not likely to take a conservative majority of the court for a ride to somewhere they don't want to go. So people have been hiring Solicitor General Clement, I think, to provide reassurance in cases that might otherwise feel uncomfortable to this very conservative supermajority. Is there a possibility that even Justice Alito might rule against the Trump administration here?

24:08I mean, he asked reasonable questions, but the tone struck me as being largely sympathetic with the president. And I think he is more committed than most to the unitary executive theory, which this would have to be an exception to. When they write the opinion, do they have to explain away what they do with the FTC? And where does it leave the unitary executive theory? They've got various ways of hiding. The simplest is, because this is a preliminary stage, is to simply say that President Trump hasn't qualified for a stay and decided entirely on procedural grounds. They also could say that they're not required to consider what standards are appropriate for removing Federal Reserve governors because in this case, the president claimed to comply with the law.

25:07So all they have to do is decide whether he did. They have a number of ways of hiding my guess is that they will not be eager to explain how what they're doing here is consistent with what they're going to do in the FTC case, because let's face it, it isn't. In this case, they know how they want to come out, which is against Trump and in favor of Federal Reserve independence. And they have a huge obstacle to doing that, which is their desire to end the independence of all the other boards. So the whole argument was basically the justices feeling around for a way that they could decide this case the way they want to without undermining what they're doing to the FTC.

25:49And I think at the end of the day, there were enough paths open to them where they could do that and they will do that. And the solicitor general had to hang his hat entirely on consistency with what they're doing in the FTC case because the actual decision on Dr. Cook is essentially defensible. The arguments went on nearly two hours, but they were really interesting on many different levels. And you can't always say that. Thanks so much, David. That's Professor David Super of Georgetown Law. Coming up next on the Bloomberg Law Show, the court's conservative justices appear likely to strike down Hawaii's restrictions on carrying guns.

26:35I'm June Grosso, and you're listening to Bloomberg. Support for the show comes from Public. Lately, it feels like there are two types of investing platforms. Some are traditional brokerages that haven't changed much in decades, and others feel less like investing and more like a game. Public is positioned differently. It's an investing platform for people who are serious about building their wealth. On Public, you can build a portfolio of stocks, options, bonds, crypto without all the bugs or the confetti. Retirement accounts, yep. High yield cash, yes again. They even have direct indexing. Public has modern design, powerful tools, and customer support that actually helps.

27:13Go to public.com slash market and earn an uncapped 1 % bonus when you transfer your portfolio. That's public.com slash market. Ad paid for by Public Holdings. Brokered services by Public Investing, member FINRA SIPC. Advisory services by Public Advisors, SEC Registered Advisor. Crypto services by ZeroHash. All investing involves risk of loss. See complete disclosures at public.com slash disclosures. The 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.

27:57Now 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. Find home wherever you roam at Sinesta ES and Simply Suites, where longer stays feel comfortable, flexible, and easy. Stretch out and enjoy spacious accommodations and home-like amenities designed to help you settle in and stay productive or relaxed for however long you need. And when you're a Sinesta Travel Pass member, staying at Sinesta ES and Simply Suites means earning points toward free nights, upgrades, and more with every eligible stay.

28:33Go to Sinesta.com to book your stay and unlock the best rates with Sinesta Travel Pass. Here today, Rome tomorrow. Join now at Sinesta.com. Terms and conditions apply. The Supreme Court's conservative justices appeared skeptical of a Hawaii law prohibiting the carrying of a gun in private places that are open to the public unless the property owner gives explicit permission. Lengthy arguments on Tuesday touched on topics from Hawaii's pre-statehood treatment of gun rights to 19th century laws aimed at disarming formerly enslaved people. Joining me is Haley Lawrence, Executive Director of the Duke Center for Firearms Law.

29:16Haley, start by telling us about this Hawaii law. So back in 2023, the Hawaii legislature enacted a law that effectively prohibits one from carrying a firearm onto private property without the express permission of the property owner or an agent of the property owner. So in the case of an apartment, someone who leases the apartment. This flips the default setting of what we normally think of and what most states do. And so Hawaii, instead of saying you have a right unless the property owner tells you otherwise, has said by default, you have no right to bring a firearm onto private property, even private property held open to the public, unless you have the express consent from the property owner.