The U.S. Supreme Court appeared Wednesday to be limiting President Donald Trump’s ability to remove a Federal Reserve governor, while drawing on-record distinctions between the central bank and other independent agencies. The case centers on the court’s view of the legal standard that governs a president’s attempts to remove a Fed governor, including whether the president may act only “for cause.”
For the past year, the justices have repeatedly allowed Trump to fire heads of independent agencies. But the court has signaled for months that the Federal Reserve is different, saying the president can remove directors of other agencies for any reason while he can remove Fed governors only “for cause,” a standard often read as covering neglect of duty or malfeasance.
The court’s prior handling of related disputes raised the Fed question. In earlier rulings, the court allowed Trump to fire Gwynne Wilcox, a member of the National Labor Relations Board, and Cathy Harris, a member of the Merit Systems Protection Board, at least temporarily. In those cases, Wilcox and Harris had argued that if Trump could fire them, he should also be able to fire members of the Fed’s board of governors. The Supreme Court disagreed and said then, “We disagree,” adding that the Federal Reserve is a “uniquely structured, quasi-private entity” that traces to the distinct historical tradition of the First and Second Banks of the United States.
That reasoning is now being tested in the Cook case. During oral arguments, the court seemed inclined to keep Lisa Cook in her job, even as the larger dispute over Trump’s attempt to remove her continues through lower courts. Justice Brett Kavanaugh, one of three Trump appointees on the court, warned that allowing Cook’s firing to proceed would undermine the Fed’s independence, saying, “would weaken, if not shatter, the independence of the Federal Reserve.”
The exchange also left a gap in the court’s explanation, according to the reporting. The justices largely avoided addressing what legal principle protects the Fed—but not other independent agencies—an issue that has become central to the arguments on the merits. Several legal experts said the differentiation lacks grounding, pointing to how other independent agencies have been treated in earlier rulings.
Jane Manners, a law professor at Fordham University, said there was “no historical grounds for distinguishing the Fed from other independent agencies that Congress has designed,” and said the court had not explained why. She said, “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, also criticized the distinction, saying, “I’ll say as a legal scholar and as a historian I think that differentiation is hocus pocus.”
The expert skepticism reflects the broader backdrop of the court’s approach to presidential removal power at independent agencies. The reporting said the court last month signaled it would likely allow Trump to fire FTC Commissioner Rebecca Slaughter. It also said the conservative majority indicated it could overturn a 90-year-old precedent that limited presidential power to fire top officials at independent agencies. In December oral arguments, Kavanaugh said agency directors—including Slaughter—exercise power “over individual liberty and billion-dollar industries” without being accountable to anyone.
In the Fed context, the reporting said the court’s conservative justices have focused on the historical role of monetary policy. The arguments have treated the setting of short-term interest rates and management of the money supply as a function that, in the court’s view, historically has not been overseen by the executive branch. In a brief filed in the Cook case, Aaron Nielson argued that the difference is rooted in how the Fed’s core function is understood, saying: “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.”
Nielson also argued that while the First and Second Banks of the United States conducted early monetary policy, they were not executive branch agencies. The reporting said Lev Menand, a Columbia University law professor and author of a book about the Fed, disputed the framing, saying the Fed exercises executive power when it regulates the banking system and that monetary policy is part of that regulation. Menand said there are “no fourth type of government power” and that “There is no other place to locate the Fed.”
A point of friction in the oral argument, as described, was that neither side pushed the full historical and conceptual explanation of what makes the Fed different. The reporting said Cook’s lawyers had no reason to question a distinction they viewed as favoring them. The reporting added that the government’s top Supreme Court lawyer, D. John Sauer, acknowledged that Trump could only fire Cook “for cause,” unlike other cases in which the White House sought removal for any reason, including policy differences, a framing that would have made it harder to argue for immediate removal.
Sauer said, “There is a long tradition of having this exercise of monetary policy be exercised independent of executive influence,” and added, “And we don’t dispute that that’s what Congress was doing.” Paul Clement, one of Cook’s lawyers, told the court that the case was “problematic for the government,” saying it could have come in and argued the Fed was not different from the FTC. Instead, Clement said, “they come in and say, no, we’re going to accept that the Fed is different, at least for purposes of this case.”
The Supreme Court, the reporting said, will initially rule on the narrow question of whether Cook can remain in her position while the broader dispute over her firing proceeds in lower courts. At some point, it may also issue more comprehensive rulings that include a fuller explanation of why the justices see the Fed as different.
Clement suggested that the Fed’s centrality to financial markets may help explain the attention the institution receives. He said there is a reason monetary policy has been treated differently “for lo these many years,” and argued that “the markets watch the Fed a little more closely than they watch really any other agency of government.”