Washington: Supreme Court Monday dramatically expanded presidential power, upholding President Donald Trump’s firings of the heads of independent federal agencies with one important exception: the Federal Reserve.
The justices allowed Fed governor Lisa Cook to stay in her job while she fights the Republican president’s effort to fire her over allegations of mortgage fraud, which she has denied.
But other than at the nation’s central bank, with its role of setting interest rates, the court held that presidents have free rein to fire agency heads at will, despite federal laws that require a cause for such dismissals and a 91-year-old decision that had limited executive authority.
With the six conservative justices in the majority, the nine-member court jettisoned its unanimous decision in Humphrey’s Executor that had limited when presidents can fire agency board members – in part to try to ensure decision-making free of political influence.
“We hold that such protection from removal is contrary to the separation of powers enshrined in the Constitution,” Chief Justice John Roberts wrote for the court.
Support for Trump’s position
The justices ruled in the case of former Federal Trade Commission member Rebecca Slaughter, whom Trump fired without cause despite a provision of federal law that requires a reason. The logic of the decision extends to other agencies, including the National Labour Relations Board, the Merit Systems Protection Board and the Consumer Product Safety Commission, where Trump has also fired board members.
Trump voiced his approval in a Truth Social post. “It is such an Honor to be the sitting President who won this Historic and Unprecedented Ruling, one of the most important ever given with respect to Presidential Powers,” he wrote.
The court had already signalled its support for the Trump administration’s position, over the liberals’ objection, by allowing Slaughter and the board members of other agencies to be removed from their jobs even as their legal challenges continued.
No president before Trump had sought to wrest control of the agencies that regulate wide swaths of American life, including nuclear energy, product safety and labour relations. But at arguments in Slaughter’s case in December, the six conservatives, including three appointed by Trump, seemed more concerned about issuing a ruling that would endure than handing too much power to Trump.
Their rhetoric was reminiscent of the presidential immunity case in 2024 that allowed Trump to avoid prosecution for his efforts to undo his 2020 presidential election loss to Democrat Joe Biden. The court is writing a decision “for the ages,” Justice Neil Gorsuch said then.
Justice Sonia Sotomayor, in a dissent she summarised aloud in the courtroom, said the ruling could lead to “submission, instability, and even oppression.”
“The president, to be sure, emerges with more power than ever before. That power was given to him by six justices on this court, not the people or the Constitution,” Sotomayor said.
Fed Governor Cook’s case
In Cook’s case, the court voted 5-4 to reject the Trump administration’s effort to get Cook out of her job now. Roberts, Justice Brett Kavanaugh and the three liberal justices were in the majority.
Allowing Cook to be ousted now, Roberts wrote, “would allow the President to remove a member of the Federal Reserve at any time, for any reason, without any notice before, and without any judicial check after. That would turn for-cause protection into little more than at-will employment.”
Roberts did include a footnote in his opinion noting that nothing forbids Trump from “trying again” to fire her, provided she is given proper notice and a chance to contest it.
Trump suggested he would take Roberts up on the offer, saying on Truth Social that “we will take appropriate action immediately to make sure that someone who has committed wrongdoing will not be making vital decisions concerning the Welfare of the United States of America!”
Cook, who was nominated to the Fed’s Board of Governors by Biden, can continue in her post at least as long as her lawsuit challenging her firing goes on, the court said. The Trump administration is appealing a lower-court ruling in her favour.
Besides trying to fire Cook, Trump had threatened to fire former Federal Reserve chairman Jerome Powell if he didn’t leave the board when his term as chairman ended in mid-May. Powell has remained as a governor, even as Kevin Warsh has replaced him as chairman.
Judges in lower courts have allowed Cook to remain in her post as one of seven central bank governors.
The true motivation for trying to fire Cook, Trump’s critics say, is the Republican president’s desire to exert control over US interest rate policy. If Trump succeeds in removing Cook, the first Black woman to be a Federal Reserve governor, he could replace her with his own appointee and gain a majority on the Fed’s board. The case is being closely watched by Wall Street investors and could have broad impacts on the financial markets and the US economy.
Cook said her case was “never about mortgage documents signed years before I became a Federal Reserve governor.”
“It was an attempt to remove me on a manufactured pretext because I refused to bow to political pressure and continued to set interest rates based only on what would best serve the American people. That is the most fundamental obligation of a Federal Reserve governor,” Cook said in a statement.
Trump’s confrontation with the Fed
Trump has been dismissive of worries that cutting rates too quickly could trigger higher inflation. He wants dramatic reductions so the government can borrow more cheaply and Americans can pay lower borrowing costs for new homes, cars or other large purchases, as worries about high costs have soured some voters on his economic management.
The Fed has left its key rate unchanged this year, but a growing chorus of policymakers is expressing concern about persistently high inflation and suggesting the central bank could raise its benchmark rate by the end of this year or leave it unchanged.
While Cook’s case was under review at the high court, Trump dramatically escalated his confrontation with the Fed. The Justice Department opened a criminal investigation of Powell and served the central bank with subpoenas.
The investigation ended in late April, the department said. The announcement cleared a major roadblock to the confirmation of Warsh as Powell’s successor.
The case against Cook stems from allegations she claimed two properties, in Michigan and Georgia, as “primary residences” in June and July 2021, before she joined the Fed board. Such claims can lead to a lower mortgage rate and smaller down payment than if one of them were declared as a rental property or second home.
Those applications, Solicitor General D. John Sauer said in January, are evidence of “gross negligence at best” and give Trump reason to fire her. In any event, he argued, courts shouldn’t be reviewing his decision, and Cook has no right to a hearing.
