What the Supreme Court Cooked Up Monday
The Supreme Court on Monday held that Lisa Cook can keep her job as a governor of the Federal Reserve—for now.
The case stemmed from President Trump’s attempt to remove Cook from the Fed after the federal housing finance regulator uncovered evidence of shenanigans regarding her mortgage applications and referred the case to the Justice Department. President Trump first demanded, in a Truth Social post, that Cook step down. A few days later, he issued a letter in which he purported to remove her from office.
Cook sued, of course. Her attorneys claimed that the mortgage allegations were insufficient to meet the statutory requirement that Fed governors can only be removed for cause, arguing that only wrongdoing in office could qualify. Since the mortgages were taken out prior to her governorship, they couldn’t be grounds for removal. They also argued that she was entitled to due process—including formal notice and a chance to respond in a hearing—before being deprived of her job.
A federal district court agreed that Cook should be allowed to keep her position while the case is litigated, issuing an injunction against the Trump administration and the Fed from removing Cook, and a divided federal appeals panel agreed. The Trump administration asked the Supreme Court to stay the injunction, which would have meant that Cook would be removed from the Fed at least until the substantive case was resolved.
On Monday, the Supreme Court handed Cook a limited victory. It refused to stay the lower court’s injunction, which means she will be able to keep her job while the case is considered by the federal courts. It agreed with Cook’s argument that she was entitled to a more formal process than the social media post plus the letter she received. Instead, the administration must formally notify her of its decision, allow her an attempt to reply to the allegations, and set a deadline for the reply.
The Court, however, rejected the narrow version of “cause” that Cook had asked it to embrace. Instead of requiring a finding of wrongdoing in office, the court said that a finding that established her unfitness for office was sufficient grounds for removal. It did not directly rule on whether the particular allegations about her mortgages would constitute “cause” but left that up to the lower courts to sort out.
The Court Will Decide What Counts as “Cause” for Removal
While this part of the decision was a loss for Cook, it was not a clear win for the executive branch. The Court made it clear that it sees a role for the federal courts in evaluating the sufficiency of the “cause” cited by the president, rejecting the view that the statute failed to provide grounds for judicial review and left the president extremely wide discretion. Interestingly, the Court here relied on the Loper Bright case, much attacked by liberals, which held that federal courts should not defer to the executive branch when interpreting ambiguous law.
This is hardly the end of the Cook case. President Trump almost immediately reacted by sending out a Truth Social post announcing that his administration would seek to cure the procedural fault found by the court by issuing a formal notice to Cook about its decision to remove her and offering her a chance to reply. That should be easy enough to do.
The question of whether the allegations against Cook—which may ripen into an indictment before the case is done—constitute cause for removal will almost certainly have to be taken up by the federal courts and likely will land before the Supreme Court again. It’s anyone’s guess how the Supreme Court will come down on that question because the standard of review laid out by the court on Monday leaves the judiciary with broad discretion and little by way of intelligible principle.
This is not the end of the Cook affair. It is just the end of the beginning.
COMMENTS
Please let us know if you're having issues with commenting.