The US Supreme Court has blocked President Donald Trump's removal of Lisa Cook from the Federal Reserve Board of Governors. The court found that removing a Fed official without just cause is not lawful. However, by overturning a 91-year-old precedent on the removal of officials at independent agencies within the government, the ruling has intensified controversy.
According to Bloomberg and other outlets on Monday, the court ruled 5-4 that Cook may retain her position while the litigation over her removal proceeds. The Supreme Court currently consists of six conservative-leaning and three liberal-leaning justices. Conservative-leaning Chief Justice John Roberts and Justice Brett Kavanaugh sided with the three liberal-leaning justices. In August last year, Trump unilaterally announced Cook's removal through Truth Social, alleging that she had committed fraud during a past mortgage process.
Chief Justice Roberts pointed out that the removal notification process via Truth Social did not provide Cook with a sufficient opportunity to address the allegations. He also explained that "whether to remove a Fed governor can be decided only by the president," while adding that "this does not mean the president can make such a decision for no reason at all." He further stated that there was "no reason to leave the public in uncertainty or to sow doubt regarding the status of the Fed, one of the most important financial institutions in the United States (and the world)." This is interpreted as meaning that, given the Fed's enormous influence on the US and the global economy as a whole, its substantive independence must be guaranteed.
Nick Timiraos, the Fed-focused reporter at The Wall Street Journal (WSJ), assessed that "the biggest winner of this ruling is Fed Chairman Kevin Powell," adding that "Chairman Powell will now be able to carry out his duties more independently, freed from the influence of President Trump, who has been pressing for interest rate cuts."
By contrast, the Supreme Court ruled 6-3 that day that Trump's removal of Federal Trade Commission (FTC) Commissioner Rebecca Kelly Slaughter last year was lawful. This effectively overturns a 1935 precedent that barred the president from removing officials of independent agencies over policy disagreements.
Last year, Trump removed Slaughter and Alvaro Bedoya, the Democratic-nominated commissioners among the FTC's members, leaving only Republican-nominated appointees. The FTC, which enforces consumer protection and antitrust laws, has five commissioners, with three seats held by the ruling party and two by the opposition.
In February last year, the Trump administration issued an executive order strengthening its authority over the FTC as well as the Federal Communications Commission (FCC), the Securities and Exchange Commission (SEC), and the National Labor Relations Board (NLRB), all legally independent agencies. Subsequently, allegations arose that, through the FCC, the administration had intervened in mergers and acquisitions (M&A) of content companies, such as the sale of Warner Brothers, or exerted influence to block certain individuals from appearing on broadcasts.
The New York Times (NYT) said the ruling would also affect more than 20 other independent agencies, including the Consumer Product Safety Commission and the Nuclear Regulatory Commission.
