Trump Can't Fire Fed's Cook Now & Oregon Sues Trump

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. When you're running a business, the best days are the ones where priorities stay on track. For midsize and large companies, that isn't always easy.

0:38Risk can touch multiple parts of an organization at the same time, often in ways that aren't immediately obvious. It might involve property, liability, or cyber. It could stem from regulatory requirements or challenges tied to a specific industry or the scale of an operation. At that level, managing risk becomes an ongoing discipline, not a one-time decision. At The Hartford, the focus is on helping businesses manage risk before it turns into something more disruptive. That means working with companies to identify where they're exposed, decide what matters most, and put practical standards in place so risk is managed as part of day-to-day operations.

1:14And when losses do happen, The Hartford can pair that risk control work with insurance coverage grounded in underwriting, risk engineering, and claims experience developed over time. Learn more at thehartford.com slash risk mitigation. As industries evolve faster than ever, companies need an environment that accelerates strategic growth, and Michigan delivers on that promise. From emerging startups to global enterprises, Michigan offers what executives value most, a resilient, innovative ecosystem, diverse communities that attract top talent, and a quality of life that supports work-life balance.

1:48With our unified Team Michigan approach, businesses scale faster and compete at the highest level. Michigan, pure opportunity. Seize your opportunity at michiganbusiness.org. This is Bloomberg Law with June Grosso from Bloomberg Radio. The Supreme Court has refused to allow President Trump to immediately oust Federal Reserve Governor Lisa Cook over mortgage fraud allegations she's denied. The order issued today, with no dissents, means Cook can remain in her position at least until the justices rule, and oral arguments in the case aren't even scheduled until January. The Supreme Court has largely sided with Trump this year in cases challenging his firings of officials at different federal agencies.

2:40So today's order was rare. Joining me is Elliot Stein, Bloomberg Intelligence Senior Litigation Analyst. Elliot, is this a big win for Cook? I would say it's a interim win for her because it does allow her to stay in her position as a Federal Reserve Board governor while the case continues to proceed in the Supreme Court. But the Supreme Court didn't really weigh in further than that. And it said that it has deferred any ruling for now until after it can hear oral argument in January of 2026. So she will be serving in her current role until then at a minimum. And then we'll wait to see what the justices say beyond that.

3:29The Supreme Court has basically sided with Trump this year in cases challenging his firing of officials at different federal agencies. For example, the firing of the FTC commissioner, the firing of the NLRB board member, and the firing of the Merit Systems Protection Board member. And the court has allowed the removal of those officials as the litigation plays out. So does this say the Supreme Court sees the Fed differently? Yeah, absolutely. I think that's exactly right. We've seen so many cases, including the ones that you mentioned, brought by commissioners of other agencies that President Trump fired.

4:08They sued. Those cases mostly went in the commissioner's favors in the lower courts. And then when it got to the Supreme Court, the justices usually on either an administrative basis or on an emergency stay application essentially overruled the lower courts and allowed the terminations to take place and take effect while the litigation played out. This is very notable because the Lisa Cook case really is different in that respect. First, you know, Justice Roberts did not issue an administrative stay like he did just a couple weeks ago in the FTC case involving Rebecca Slaughter. And then he referred it to all the justices.

4:50And the conservative majority on the Supreme Court didn't rule in President Trump's favor like they did in some of the other cases, like the NLRB case, the Wilcox case, and the Boyle case, which was another similar case. I think what's really notable about the Lisa Cook case is that the Supreme Court really is viewing the Federal Reserve differently than it is other agencies. And we already knew that from the Wilcox decision in May, where the Supreme Court said that the Federal Reserve is unique. It has a unique structure. It has a unique history. It's really quasi-private, according to the justices.

5:26And therefore, it's not like these other independent agencies, which the conservative justices seem to view as more clearly falling under the executive branch. And there was no dissent. So now the court is going to hear arguments in the case challenging Trump's firing of FTC commission member Rebecca Slaughter, as you mentioned. That's in early December. Right. Does the schedule for the Cook case suggest that the justices want to look at the FTC case before turning to the Fed? Yeah, I think that's a fair reading. I mean, I think the issues are a little distinct, right? I think the FTC case really is going to concern whether for-cause removal restrictions are constitutional or not, and whether the Humphreys-Executor Supreme Court case from 1935, which established that they are constitutional, should be overruled or not.

6:24That's really what's at issue in that case. This case, Lisa Cook case, almost presumes that the for-cause removal restriction is constitutional. And the issue is, what does cause mean? What does it require? And, you know, should there be notice and opportunity to be heard? And who should even make that determination as to whether the for-cause standard has been met? And the Trump administration here, the solicitor general, said that Trump had reason to fire Cook for cause. He also said the courts don't have the discretion to review the president's determination. Right. That's the government's argument that, A, the four-cause standard is very broad.

7:07All it requires is something beyond a policy disagreement, and that it's really up to the president to determine whether that standard has been met. You know, Lisa Cook obviously takes a different view and says, well, if it's only up to the president to determine whether the four-cause standard has been met, That essentially renders the standard meaningless because you've turned it almost into an at-will standard, which should not be the standard at all. For those few people who may not have heard about these mortgage investigations, Trump has accused Cook of mortgage fraud, which she denies. She has not been charged with a crime yet.

7:47And Bloomberg News has previously reported that loan documents for Cook's Georgia home appear to contradict. the claims made by the FHFA chair, Bill Pulte. So this is at a very early stage. How did the federal judge who reviewed this look at it? I think you're exactly right. This is all at a very early stage. And so they're really trying to determine what the law even requires before they get into the facts of the case. The trial court judge essentially held that for cause can't solely be based on something that happened before the person was appointed to her current role. If it is something that happened before she was appointed, it has to at least tie into her ability to serve in that role, and that hasn't happened here, according to the trial court judge.

8:41And the trial court judge also said that there has to be some sort of due process, according to the Constitution, and that that wasn't satisfied here either. The appeals court ruled solely on the due process argument and didn't even get to what forecause requires. And so, you know, the Supreme Court, we don't know exactly how far they're going to go. We don't know if they're going to rule on both those issues. I'm sure they're going to explore both those issues, but they may, like the appeals court, wind up ruling just on, you know, whether due process is required. And they may say, you know, if they agree with the appeals court, they may say due process was not satisfied here.

9:20And, you know, they'll send it back to the lower courts or they'll articulate what due process actually does require and then send it back to the lower courts to determine whether that standard was met here or not. So it is early, as you say, after the Supreme Court rules, most likely it will go back down to the lower courts. And did the Trump administration claim that there was notice to Cook because of social media posts of the president? Yeah, their initial argument is that notice and opportunity to be heard isn't even required here because there's no property interest in a public interest role like the Federal Reserve Board governor seat.

10:02But their argument after that is, OK, well, if notice is required, it was satisfied here because President Trump's social media posts gave her ample notice and she had ample notice to respond to those posts. And she hasn't really substantively articulated why the allegations are wrong. But, you know, I think her approach is a sensible one in the sense that, you know, she's saying, look, the law requires more than that at a minimum. And so let's argue about what the law requires before we even get into the fact here. And in this case, you had a group of former Fed and Treasury officials who served under Republican and Democratic administrations writing a friend of the court brief that urged the justices to leave Cook in place?

10:51Right. These are amicus briefs, like you said, from former Federal Reserve Board governors appointed by presidents of both parties, as well as Treasury secretaries appointed by presidents of both parties arguing why Federal Reserve independence is so important, and they just point to a more stable monetary policy in countries where you do have Federal Reserve board independence. This, again, goes to the point which I think the Supreme Court already picked up on previously in their Wilcox decision in May as why the Federal Reserve is different from other independent agencies that more clearly fall under the executive branch.

11:31And Elliot, you are giving Cook a 60 % chance to prevail at the court? Exactly. I think she's a slight favorite based on what we've seen the Supreme Court do in the Wilcox decision and what we sort of have seen it do more recently in Justice Roberts not issuing an administrative stay and again, in all the justices not doing what they did in these other cases where they allow determinations to take effect while the case plays out. But it is a close case. There's a lot of unsettled issues like the ones we've talked about. What is cause? What does it require? Is there a due process requirement? What kind of notice is required?

12:08And who should make that determination? It's a high stakes case and the oral arguments should be interesting. Thanks so much, Elliot. That's Bloomberg Intelligence Senior Litigation Analyst Elliot Stein. Coming up next on the Bloomberg Law Show, President Trump has already sent troops into Los Angeles and Chicago over the objections of the governors of California and Illinois. Oregon isn't waiting for the deployment of troops. It's already suing Trump over what it says is an unlawful federalization of the National Guard. I'm June Grosso and you're listening to Bloomberg. This message is brought to you by Apple Card.

12:48Apple Card puts the power of titanium in the palm of your hand. What does that mean? It means the power to earn unlimited daily cash back on your purchases every day. It means a materially different credit card accepted anywhere in the world MasterCard is accepted. Ditch the plastic. Upgrade to titanium. Apply in the Wallet app on iPhone today. Subject to credit approval, Apple Card is issued by Goldman Sachs Bank USA Salt Lake City branch. Terms and more at AppleCard.com. Support for this show comes from Public.com. If you're actively involved in your portfolio, you probably catch yourself repeating the same actions.

13:22buying 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. Just 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.

14:02Go to public.com slash market and fund your account in five minutes or less. That's public.com slash market. Paid 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. 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.

14:44Now 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. There is no insurrection. There is no threat to national security. And there is no need for military troops in our major city. The next city to see the National Guard on its streets will be Portland, Oregon. In a post on Truth Social on Saturday, President Trump said he was authorizing troops to, quote, protect war-ravaged Portland and any of our ICE facilities under siege from attack by Antifa and other domestic terrorists. But the state isn't waiting for the deployment to push back.

15:31It's already suing Trump over what it says is an unlawful federalization of the National Guard. Here's Governor Tina Kotick. Any deployment would be an abuse of power and a misuse of federal troops. My guest is Leon Fresco, a partner at Holland and Knight and the former head of the Office of Immigration Litigation in the Obama administration. Leon, is this similar to what happened in Los Angeles and Chicago, where Trump deployed troops over the objection of those city's mayors and the state's governors? Well, it's similar in one respect and it's different in another respect. The Los Angeles operations first started off as much broader National Guard operations, basically trying to keep the peace in Los Angeles due to conflagrations that had happened as a result of ICE enforcement at various Home Depot and other type of locations.

16:29Whereas here in Portland, there is that type of rhetoric, but at least the discussion of it is basically only about sending 200 Oregon National Guard troops to protect federal facilities. And so the federal facility protection part was actually viewed as lawful in Los Angeles when that occurred. What was not viewed as lawful by the federal courts there was the larger protection that didn't involve the protection of federal facilities. And so even though there's now a lawsuit that's been filed by the Oregon Attorney General seeking to block the federalization of the National Guard, at the end of the day, the ICE facilities, at least according to the Los Angeles order, appear to be something that the National Guard can be deployed to protect because it is a federal facility.

17:23but we'll wait and see where this goes because there's other issues at play. Also, the city of Portland is claiming that ICE violated its land use agreement with the city of Portland by detaining individuals for much longer than they were supposed to be detained. And other issues with regard to how far these protests are being blocked by the National Guard agents. Are they just protecting the facilities, or are they going further out than that? And so all of those things will need to be resolved in a federal court proceeding later this week. The preliminary injunction hearing is supposed to be determined later this week, but for now, we're going to basically see, can the Guard be deployed at all?

18:06Most likely, the answer will be yes to protect the federal facility, but then there will be questions about, again, is ICE violating the terms of its land use agreement with Oregon? And are these federal troops doing more than just protecting the federal facility? So do you think that Oregon officials jumped the gun by filing a lawsuit now instead of waiting to see how the troops are deployed, whether they just guard the ICE facilities or whether they engage in policing? Correct. You would normally want to build a better record in a situation like this, but I do think that at this stage of things, there's a lot of politics involved, and so people just want to get these lawsuits in, and then they'll sort of let the facts come as they may, which is not normally how you would do a lawsuit, but in these days where everything is politics, you know, there's all of these questions.

19:06Was the National Guard mobilization motivated by politics? Was the lawsuit motivated by politics? And so there's politics on all sides here, and we'll just have to wait and see what the court, who is not supposed to be a political actor, does about all of these various claims that are being made. And also one further complicating fact generally is that in civil litigation right now, in cases involving the government, unless there's some threat to life or liberty, those are being continued right now because of the government shutdown. And so unclear if these hearings will go forward if there is a shutdown that continues for some period of time.

19:51Have Illinois or Chicago sued over the deployment there? They sued with regard to the way that ICE is enforcing both at the immigration court and with regard to grant funding, but not with regard to the National Guard. So many lawsuits, very difficult to keep track of them, but you do. Yes. So now you had a judge, a Reagan-appointed judge, with 40 years experience on the bench, write a blistering decision finding that the Trump administration unconstitutionally targeted non-citizens over their speech about the Gaza War. Tell us what Judge William Young in Boston, what he found. Sure. So the case is called the American Association of University Professors versus Rubio.

20:41And it's a question about the policies that the administration was putting in place with regard to saying, basically, if you support Hamas in your rhetoric on social media, etc., that you would, for foreign policy violation reasons, be deportable from the United States if you were not a citizen. And so the people who sued in that case said this was ideological deportation that violated the First Amendment. So that was their claim. And the Trump administration was saying that the deportation was not based on political speech or pro-Palestinian views, but really at the end of the day was based on support for terrorist organizations, a.k.a.

21:30Hamas, and national security concerns, meaning that if people were sort of riling up tensions in the United States who are foreign nationals, so they're not U.S. citizens, they're foreign nationals, engaging in dialogue that's meant to rile up tensions, why is that in the national interests of the United States? Better that, you know, people like that not be here, so that there's less, quote-unquote, tension being riled up. And so this is sort of the debate, and the issue is who wins in this situation? Does the First Amendment win? You know, as long as you're not doing any actual violence, if you're just advocating on behalf of the Palestinians, and let's say even if it's a pro-Palestinian solution to the conflict, is that protected, or can the administration, based on the broad authority given to it by the congressional statute, say, look, the statutes say when the Secretary of State finds any conduct bad for the foreign policy interests of the United States, the Secretary of State can order a deportation.

22:34So who wins in that fight? And what the court said was that this was First Amendment, plain and simple discrimination. It was designed to intentionally chill protected speech, to create an environment of fear regarding pro-Palestinian views so that people wouldn't voice these opinions because they knew they could get deported if they voiced these opinions. And so the court said that that was unacceptable and that what needed to happen moving forward is, because it would violate not just the First Amendment but the Administrative Procedure Act, is that there needed to be clear guidelines on whatever is and isn't acceptable, that that would be what could maybe potentially be implemented in a future case.

23:22And of course, those clear guidelines could be challenged. But this idea that the Secretary of State could just, without any warning, find speech not acceptable and revoke your visa without any clear guidance, he viewed as unacceptable and violative of the First Amendment. And then there was a lot of, of course, very high-minded rhetoric about the First Amendment and democracy and protection of rights, etc. But at the end, this is the basic framing of the opinion. And so now, of course, it will go up to the First Circuit and then the Supreme Court to try to figure out what's actually going to win in this battle between the First Amendment and the rights of people to speak in America about views, whether they're views that are popular or not popular, as long as they're not actually doing anything else other than just speech, versus the Secretary of State's rights under the congressional laws to, if you read the text of those statutes, pretty much order anyone deported that he thinks he should for the purposes of protecting U.S.

24:26foreign policy. Yeah. So how much of a setback is it for the administration to its claim that the secretary of state has the authority to revoke visas and green cards under this rarely used provision? It will be a major, major problem if the higher level courts say that that statute as written is too vague to be constitutional or that the way it's being applied is nevertheless too vague. Meaning perhaps if you put some policies with regard to a specific form of conduct, then maybe you can apply it. but just without warning, sort of having this catch-all that you don't know if you're going to get caught in the catch-all, that might be too vague.

25:10So I think this has the potential to be a dramatic setback for the Trump administration and the Secretary of State, but we'll need to see some higher courts doing this at the end of the day, because just the district court decision alone isn't going to ultimately change the outcome of these cases. So once these cases get appeal and get to the Supreme Court, that's where we're going to wait and see. But if this ruling is maintained, it would be a dramatic alteration to the policy that the Trump administration was trying to put in place, which was to say, if you're not careful with, you know, the things you're saying in the United States while you're here and you're not a citizen, you could subject yourself to deportation.

25:56So better to just be here and be like a polite guest in someone's home where you don't say anything about anything controversial when you're visiting someone's home. You just kind of have your cake and your wine, and then you go home. Cake and wine. I like that combination. Yes, exactly. You just say, how's the weather outside? It's 80 degrees. It's lovely. That kind of thing. And that's pretty much the extent of what you should be doing here if you're not a U.S. citizens. And in this 161-page scathing ruling, the judge directly and sharply criticized President Trump and his immigration policies, saying they were intended to strike fear into non-citizens and chill freedom of speech.

26:43Look, the judge was very unhappy with the Trump administration. The judge was very unhappy with the arguments that were being made about non-citizens not having the same First Amendment rights as U.S. citizens, which, by the way, is a undecided issue in federal law. I would not say that that's a decided issue. And in fact, the last real decision on that, which was a 1952 case called Harris Yadis v. Shaughnessy, which had to do with membership in the Communist Party, went against the First Amendment rights of foreign nationals. And so from the standpoint of thinking that it's a slam dunk that foreign nationals have the same First Amendment rights as U.S.

27:26citizens, that's not exactly true, and we'll need to see how the court deals with it. But nevertheless, this judge just thought that this was being implemented in a way that was just unconscionable to the court. And so the court definitely in those 160 pages, decided to express itself and its frustration very openly and was putting, you know, notes in that the court had received in the past and writing notes back to people. It was very personal, obviously, decision for this judge. And so we'll wait to see if the appellate courts think that makes it more or less persuasive moving forward. And I've never seen anything quite like this in a judge's opinion.

28:09At the start of the judge's opinion, before the title of the case, it began with words taken from an anonymous postcard threatening the judge that had been sent to him in June. And it was a duplication of the note in this block printing, quote, Trump has pardons and tanks, what do you have? And then the judge typed his response beneath it. Dear Mr. or Ms. Anonymous, alone I have nothing but my sense of duty. Together, we the people of the United States, you and me, have our magnificent Constitution. Here's how that works out in a specific case. And then the opinion followed. Does that change the way an appellate court will assess this decision?

28:56I think the problem is this. All of the federal judges grow up reading these great decisions written by other judges where, you know, you have a learned hand or a judge Posner who put some rhetorical flourishes in cases and people said they, those are the famous judges and they make their mark. And so every judge wants to add rhetorical flourishes to their case. And, you know, sometimes the judges are very upset. This judge was clearly very upset here. I think personally, not that I want to be a judge anytime soon, but if I were a judge, I think the most effective judges are the ones that do not make it look like in any way they're taking any of this personally.

29:39And they're just basically printing out a decision the same way chat GPT would do it or, you know, Microsoft Copilot or something very impersonal. But just to lay out the facts. And when somebody reads those in an appellate court, they say, wow, that's a very thoughtful judge. clearly this judge was just trying to get it right. Those decisions tend to have much more deference given to them than the ones where there are these larger rhetorical flourishes. Although when you survive them, if you get those decisions upheld, then those do become the famous decisions of all time that get cited to students and people read them.