Daijiworld Media Network - Washington
Washington, Jan 21: Conservative and liberal justices of the US Supreme Court on Wednesday appeared sceptical of President Donald Trump’s attempt to remove Federal Reserve Governor Lisa Cook, raising serious concerns about the central bank’s independence and the wider economic fallout of such a move.
During nearly two hours of arguments, the justices indicated they were unlikely to lift a lower court order that has blocked Trump from immediately firing Cook while her legal challenge continues. Several judges questioned why Cook was not given formal notice or a hearing to respond to mortgage fraud allegations cited by the president as grounds for her removal — allegations she has denied.
The case has emerged as one of the most significant legal battles testing Trump’s expansive view of presidential authority since he returned to office last year, with potentially far-reaching implications for the autonomy of the Federal Reserve.
Chief Justice John Roberts and other justices pressed Solicitor General D. John Sauer on whether an alleged error in mortgage paperwork amounted to sufficient “cause” for removal under the Federal Reserve Act. Sauer argued that even a mistake could reflect “deceit or gross negligence,” warranting immediate action, a stance that drew visible scepticism from the bench.
Cook’s lawyer, Paul Clement, countered that the claims involved, at most, an inadvertent mistake made before she joined the Fed, and warned that Trump’s position would effectively turn protected Fed appointments into at-will jobs, undermining the institution’s insulation from political pressure.
Several justices, including Brett Kavanaugh and Amy Coney Barrett, raised alarms about the economic consequences of allowing a president to summarily dismiss a Fed governor, noting submissions from economists who warned such a move could destabilise markets or even trigger a recession.
The Supreme Court had earlier allowed Cook to remain in office while the case proceeds. A lower court ruled that Trump’s attempt to remove her without due process likely violated constitutional protections and did not meet the legal standard for “cause” under the law.
Cook, appointed in 2022 by former president Joe Biden and the first Black woman to serve as a Fed governor, has said the allegations are a pretext aimed at influencing monetary policy amid Trump’s repeated criticism of the Fed for not cutting interest rates faster.
The case is widely seen as the most consequential challenge to the Federal Reserve’s independence in its more than century-long history, with the court’s eventual ruling expected to shape the balance of power between the White House and the central bank.