What the Lisa Cook Decision Means for the Fed’s Independence

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0:19The Supreme Court says President Trump can't fire Fed Governor Lisa Cook, a crucial ruling for the central bank's independence. Kevin Warsh is Trump's own pick. He became Fed chair in May. And this ruling actually helps him. But a separate Supreme Court decision expands presidential authority to fire officials at other government agencies. And Comcast is breaking up. Where we previously believed that scale and the diversification benefits warranted operating these businesses as one company, we've now simply changed our mind about that. It's Monday, June 29th. I'm Alex Osilev for The Wall Street Journal.

0:56This is the PM edition of What's News, the top headlines and business stories that move the world today.

1:10Today, the Supreme Court rejected President Trump's bid to fire Federal Reserve Governor Lisa Cook, at least for now. Trump has wanted to fire her as part of his mission to remake the Fed. Joining us now to discuss what the court's decision means for the central bank's independence is WSJ chief economics correspondent Nick Timoros. Nick, let's go back for a second and remind us why Trump wanted to fire Cook in the first place. The stated reason was alleged mortgage fraud. A top housing official, Bill Pulte, claimed last summer that Cook had misrepresented which of two homes was her primary residence on mortgage paperwork.

1:43And so Trump moved to fire her last August, saying he had lost confidence in her integrity. A lot of people saw this as a pretext. Cook had never been charged with a crime. Trump had been frustrated that he couldn't get lower interest rates from the Fed. And so critics saw this less as a fraud case and more as a way to remove a governor who wasn't cooperating with what Trump wanted. And what we see today in this 5-4 decision authored by Chief Justice Roberts was a nod to Fed Independence. He wrote that the due process here matters, that Cook never had a chance to explain what had happened. And so if the president can really just invent or cite any reason, if you try to get around this for-cause standard with just any single thing you'll cite, you're turning these officials into people who serve at the president's will.

2:41And that is not the standard that we have for the Federal Reserve. We also have a new Fed chairman, Kevin Warsh. How does this decision affect how he does his job? Kevin Warsh is Trump's own pick. He became Fed chair in May. And this ruling actually helps him. It forecloses one of the most direct ways that a president could pressure a chair by packing the board with loyalists who would outvote him, by threatening the governors around him. So Warsh now has more room to operate independently. Right. And Lisa Cook, the plaintiff in this case, said in a statement that the decision was a vindication of Fed independence.

3:20But there was also a separate decision out today involving Rebecca Slaughter, a Democratic member of the Federal Trade Commission. Trump fired her last year, and the Supreme Court today gave the president free reign to fire officials at other independent agencies for any reason. So does this mean the Fed is different from other government agencies? That's exactly what it means. The whole legal argument for Fed independence had always rested on this 90-year-old case, Humphreys' executor, that was essentially gutted in the slaughter decision. I would say both of these rulings were what people had expected.

3:58But it is showing that the bar for the Fed, the protection for the Fed, is greater now than for other independent regulatory bodies. You mentioned that this was a 5-4 decision from the Supreme Court. Chief Justice Roberts wrote the opinion with Sotomayor, Kagan, Kavanaugh, and Jackson concurring. Is that a surprising alliance of judges? Well, yes, you do have appointees of Democratic and Republican presidents joining together in the majority. I think if there was any surprise here, it was actually that it was 5-4 and not 6-3. There were some court watchers who thought that Justice Amy Coney Barrett might join with the majority on this.

4:39And, you know, this issue is not fully resolved. This is being reported as a big win for the Fed. And that's true in a narrow sense. But the court today said, you know, Lisa Cook can stay on the board while she fights her case through the courts. And she will still have to do that. That was WSJ Chief Economics Correspondent Nick Timoros. Thank you, Nick. Thanks for having me. In a separate ruling today, the Supreme Court upheld state laws that count mailed ballots if they were sent by Election Day but arrive after. The 5-4 decision ruled against the Republican Party, which had challenged Mississippi's grace period of five business days.

5:16The Trump administration supported the Republican National Committee at the court, and the decision is the latest of the administration's legal losses on elections. And the Supreme Court declined to take up President Trump's appeal of a jury verdict, finding that he sexually abused and defamed writer E. Jean Carroll. The high court didn't elaborate on its reasons for not hearing the case, but the move leaves intact a$5 million judgment against him. Stocks rallied today. Last week's route in tech stocks went on pause, with the Nasdaq jumping more than 2 percent. The S &P 500 added 1.2 percent. It and the Nasdaq both broke five-session losing streaks.

5:54And the Dow, which added Google parent Alphabet as one of its 30 stocks today, rose 0.6 percent and closed above 52 ,000 for the first time. It's the Dow's 18th record close this year. Moving now to international news, as we mentioned on this morning show, the U.S. and Iran have agreed to end days of back-and-forth fighting around the Strait of Hormuz. Trump said today that the two countries will resume peace talks tomorrow in Qatar. White House Press Secretary Caroline Levitt told Fox News that Steve Whitcoff and Jared Kushner will attend the talks. But Iran's deputy foreign minister said Tehran hadn't decided on the timing of the discussions.

6:30And France has passed a new law imposing fines on, quote, ultra-fast fashion. It sets the criteria for fines for companies that rush out products at much lower prices than it costs to repair clothes and shoes and other merchandise. The law also bans advertising and influencer promotions by ultra-fast fashion companies. France wants to rein in Chinese e-commerce giants like Xi 'an and Temu that have gained ground in Europe, saying they're bad for the environment. Xi 'an has said it's not an ultra-fast fashion retailer and today said it was reviewing the legislation. Coming up, in this moment of media consolidation, why is Comcast spinning off NBCUniversal?

7:08That's after the break.

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7:37Comcast said today that it plans to separate its media and connectivity businesses into two publicly traded companies. The standalone NBCUniversal will include the company's film and television studios, its theme parks division, and its European media business. The remaining Comcast business will consist of the company's broadband, wireless, and cable TV operations. WSJ Deputy Media Editor Jessica Tunkel joins me now with more. Jessica, Comcast only finished its acquisition of NBCUniversal in 2013, really not that long ago in the scheme of things. What kinds of competitive pressures is it facing now to cause it to undo that merger?

8:13These two businesses, we're talking about the cable connectivity business and the media and entertainment business, these are not getting easier. On the connectivity side, you have Elon Musk getting into the business, Amazon said they're working on something. And obviously on the media and entertainment side, you're seeing more and more consolidation. So they needed to do something and they felt this was the right time. Yeah, here's what Comcast co-CEO Mike Cavanaugh had to say about that. Where we previously believed that scale and the diversification benefits warranted operating these businesses as one company, we've now simply changed our mind about that.

8:49Now, like you said, there's been all this consolidation in media. Just look at Paramount's acquisition of Warner. So what could happen with NBCUniversal? I mean, could we see this big feeding frenzy of people trying to acquire it? You would have to think there would be a lot of interest in this. You have Bravo, Real Housewives, Saturday Night Live, but you also have the movie studio that is behind all these huge hits. We're going to have The Odyssey coming out in a couple weeks. So it's going to be really interesting to see what happens a year from now. And what about the broadband business? Yeah, I mean, what's interesting about Comcast connectivity business is that they could continue to invest in content for NBCU because broadband was doing so well.

9:28That has not been the case with all these new entrants and the increasing competition. And one question a lot of folks are asking is, could they combine with John Malone's charter? John Malone controls charter. He's made it clear he'd be interested in such a deal. So we'll have to see what happens. That was WSJ Deputy Media Editor Jessica Tunko. Thanks, Jessica. Thanks for having me. Turning now to another TV provider, we're exclusively reporting that the satellite TV company Dish DBS is preparing to file for Chapter 11 bankruptcy. That could come as soon as tomorrow. EchoStar, which owns Dish DBS, has been struggling for years with heavy debt and subscriber losses.

10:06And it's also facing regulatory scrutiny over the progress made in its 5G network buildout. Spokespeople for EchoStar and Dish didn't respond to requests for comment. It's been about 100 days since Josh DeMauro took over as CEO of Disney. The company's stock price is about where it was a decade ago. And DeMauro is on a mission to reorganize the company and make it more profitable. For more, I'm joined now by WSJ entertainment reporter Ben Fritz. Ben, what have we seen from DeMauro so far? DeMauro has made several big moves. He's been trying to make big changes to the company's digital strategy.

10:42and he consolidated all of Disney's marketing operations from film, TV, streaming, parks, and super products into one. And in doing that, they laid off about a thousand people, which is pretty significant. Disney in the past has operated somewhat like fiefdoms. The businesses each kind of did things their way. He wants everybody to be focused as much as possible on a digital strategy and think of themselves as a digital company. And what would that look like for Disney? So DeMauro wants the company to be focused a lot more on Disney+. Damaro wants Disney Plus to be kind of people's gateway to everything Disney.

11:15So one major push is getting ESPN on there so that sports and family movies and adult content and everything are all unified together into one app. And he also wants it to become possible for people to see theme park promotions and buy their theme park tickets, perhaps, on that app. What basically DeMauro said was that if you look at what Netflix and other kind of digital native companies are trying to do, they're trying to get the kind of assets Disney has. They're trying to buy sports rights. They're trying to get valuable IP. That's why Netflix went after Warner Brothers. Disney already has that stuff.

11:51So the question is, can it then more effectively use it online? And in that sense, it might finally be ahead of competitors like Netflix instead of behind them. That was Journal Entertainment reporter Ben Fritz. Thanks, Ben. Sure. My pleasure. And that's what's news for this Monday afternoon. Today's show is produced by Alexis Moore with supervising producer Tali Arbel. I'm Alex Osalev for The Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.

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