Supreme Court Justices Sharply Question Trump’s Attempt To Fire Fed Gov. Lisa Cook

The justices of the Supreme Court appeared strongly skeptical of President Donald Trump's attempt to fire Fed Gov. Lisa Cook as they grilled the administration's top litigator in a hearing Wednesday.

During the hearing, Trump's solicitor general, John Sauer, argued the president was well within his rights to fire Cook over allegations that she committed mortgage fraud, asking the Supreme Court to overturn a lower court ruling temporarily blocking her removal.

"The American people should not have their interest rates determined by someone who was, at best, grossly negligent in obtaining favorable interest rates for herself," said Sauer.

But Sauer faced sharp questioning from both the liberal and conservative justices on the high court, and experts now expect the majority to reject Trump's attempt to fire Cook.

"Although the Trump administration contends that the president acted within the law, a majority of the justices seemed ready to reject the government’s request to allow him to remove her," SCOTUSBlog cofounder Amy Howe wrote after the hearing.

Cook, a Biden appointee, is one of the 12 members of the Federal Open Market Committee that sets the Fed's interest rate policy. Trump has long demanded lower rates from the Fed, and Cook's removal would allow him to nominate a replacement who is more in tune with his vision of easy money.

Trump's pressure campaign for lower rates has included sharp attacks on Fed Chair Jerome Powell, who revealed last week that the Department of Justice has launched a criminal investigation into cost overruns in renovations to the Fed's headquarters.

Powell, who has not commented on Cook's legal battle with Trump, slammed the DOJ probe in an extraordinary public statement and attended Wednesday's hearing in a silent show of support for his Fed colleague.

The oral arguments focused primarily on two key questions: whether unproven allegations about personal conduct constitute sufficient cause to remove a Fed governor, and whether Trump's social media post calling for Cook to resign was sufficient notice for her to respond to the allegations before he attempted to fire her five days later.

But behind the technical legal questions of the case hovered the larger, more significant question of whether the Federal Reserve could retain its independence if the president gained carte blanche to fire policymakers.

"Your position that there's no judicial review, no process required, no remedy available, a very low bar for cause that the president alone determines—that would weaken, if not shatter, the independence of the Federal Reserve that we just discussed," Justice Brett Kavanaugh, a Trump appointee, told Sauer during the hearing.

By law and tradition, the Fed is structured to be independent from political whim and influence. History shows that keeping interest rates artificially low for political purposes can lead to runaway inflation and capital flight, wreaking havoc on the economy and ultimately driving up borrowing costs.

Instead, the Fed is supposed to set rates based on its dual mandate of price stability and maximum employment, using higher rates to fight inflation and lower rates to boost the job market. Even so, policymakers often have honest disagreements about what interest rate would be ideal for the economy.

Trump, meanwhile, has pushed for drastically lower interest rates since starting his second term, venting fury at Powell when the Fed held its policy rate steady last spring and summer, before initiating cuts in September.

The Fed appears poised to once again pause rate cuts when the FOMC next votes on Jan. 28, raising the prospect of renewed assaults from the president.

Indeed, speaking at the World Economic Forum in Davos, Switzerland, on Wednesday, Trump lashed out at Powell, saying, "we have a terrible chairman right now" and calling for lower interest rates.

Against this dramatic backdrop, the Supreme Court justices weighed arguments from Sauer and former U.S. Solicitor General Paul Clement, who represented Cook at the hearing.

Justice Amy Coney Barrett, another conservative Trump appointee, questioned why there hadn't been any sort of hearing on the facts before Trump's attempt to fire Cook, which she noted may have bolstered the case for firing her and prevented extended litigation.

"It's gone up from the District Court to the Court of Appeals, and now we're here. And if there isn't anything to fear from a hearing, and if you have the evidence, why couldn't those resources have been put into a hearing?" asked Barrett.

If the justices do side with Cook in the case, they would have the option of simply letting the lower court's temporary injunction stand, allowing her to keep the job while the case plays out in court.

Or, more decisively, the Supreme Court could rule that Trump did not have cause to fire Cook, dealing a fatal blow to the administration's legal case in the matter.