The Supreme Court appeared Wednesday to carve out a distinct exception for the Federal Reserve from President Trump’s expanded authority to fire heads of independent agencies. Justice Brett Kavanaugh said allowing Trump to remove Federal Reserve Governor Lisa Cook would “weaken, if not shatter, the independence of the Federal Reserve.” The justices’ signals suggest they see the Fed differently than other government agencies where they have already permitted Trump to dismiss officials for any reason.
The distinction raises an unresolved legal question: what principle actually protects the Federal Reserve when the Supreme Court has struggled to articulate it. Legal scholars have challenged the justices’ reasoning, arguing the Fed is not fundamentally different from other independent agencies in ways the court has explained.
The Court’s Exception
For the past year, the Supreme Court has been systematically expanding President Trump’s authority to fire heads of independent agencies. But during oral arguments Wednesday in a case involving the Federal Reserve, the justices signaled they see one agency differently.
The Federal Reserve appears to occupy a unique legal space in the court’s view. While the justices signaled they would allow Trump to remove officials from other agencies at will, including Federal Trade Commission Commissioner Rebecca Slaughter, they seemed inclined to restrict his power over the Fed’s Board of Governors.
“Allowing Cook’s firing to go forward would weaken, if not shatter, the independence of the Federal Reserve,” Justice Brett Kavanaugh said during arguments on Trump’s effort to remove Fed Governor Lisa Cook. Kavanaugh was one of three Trump appointees signaling skepticism toward the president’s position.
The Distinction Without Explanation
The Supreme Court has previously stated its rationale: the Federal Reserve is a “uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States.” Unlike other independent agencies, the court has suggested, the Fed operates in a space historically removed from executive branch control.
But the court largely sidestepped articulating what that distinction actually means legally. Legal experts say that omission exposes a weakness in the reasoning.
“There’s no historical grounds for distinguishing the Fed from other independent agencies that Congress has designed,” said Jane Manners, a law professor at Fordham University. “The whole argument was premised on the idea that the Fed is different. They haven’t explained exactly why.”
Peter Conti-Brown, a professor of financial regulation at the University of Pennsylvania and author of a book on the Federal Reserve, was more blunt: “I’ll say as a legal scholar and as a historian I think that differentiation is hocus pocus.”
The Unitary Executive Doctrine and Its Limits
The Supreme Court’s embrace of the “unitary executive” theory sets the broader context—the doctrine that the president should exercise full control over agency staffing. The conservative justices have signaled they intend to overturn a 90-year-old precedent that limited presidential removal power.
Chief Justice John Roberts and his colleagues have argued that agency officials exercise enormous power over individual liberty and billion-dollar industries without democratic accountability. At a December oral argument over an FTC case, Kavanaugh articulated this view directly.
Yet in the Federal Reserve case, the conservative justices found room to apply different logic. They have suggested that monetary policy—the setting of interest rates and management of the money supply—has historically operated independent of executive branch oversight in a way other regulatory agencies have not.
Some legal scholars have supported this distinction. Aaron Nielson, a law professor at the University of Texas and former top lawyer in Texas government, wrote in a brief that “whereas the modern FTC indisputably exercises executive power, the Fed’s core function is monetary policy, which need not and often does not require executive power.”
Other experts have contested that reading. Lev Menand, a law professor at Columbia University, argued that the Fed does exercise executive power through banking regulation. “There is no fourth type of government power,” Menand said. “There is no other place to locate the Fed” beyond the executive category.
The justices avoided engaging this question directly during Wednesday’s arguments. Paul Clement, one of Cook’s lawyers, noted that the government’s own position undermined its case: “It’s kind of why this case is, I think, problematic for the government because they could have come in here and said, you know, Fed, schmed, it’s not that different. This is just like the FTC. Instead, they come in and say, no, we’re going to accept that the Fed is different, at least for purposes of this case.”
The government’s top Supreme Court lawyer, D. John Sauer, conceded the distinction during oral arguments, saying Trump could only fire Cook “for cause”—a legal standard the administration had resisted in other contexts.
The Supreme Court will initially rule on whether Cook can remain in her position while broader litigation continues in lower courts. But the justices may eventually face pressure to issue more comprehensive rulings explaining their reasoning.
For now, the Fed’s size and its influence on financial markets appear to offer it a measure of protection. Clement told the justices that there was a reason “monetary policy has been treated differently, for lo these many years. And there’s a reason that the markets watch the Fed a little more closely than they watch really any other agency of government.”
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