Supreme Court rules Trump's firing of Federal Reserve governor Cook was unconstitutional

The landmark ruling limits a president’s authority over the central bank.

The U.S. Supreme Court has rejected President Donald Trump's legal rationale for removing Federal Reserve governor Lisa Cook from office, ruling she can stay on the job while her challenge to the firing plays out in court.

In a 5-4 vote, the high court said Trump does not have the constitutional authority to fire a Fed governor without cause. The landmark ruling limits a president’s authority over the central bank.

Chief Justice John Roberts wrote the opinion for the majority, which was joined by conservative justice Brett Kavanaugh, as well as the court’s three liberal members, Elena Kagan, Sonia Sotomayor and Ketanji Brown Jackson. The four other conservative justices, Clarence Thomas, Samuel Alito and Neil Gorsuch, dissented.

In August, Trump announced on social media that he was firing Cook, alleging she had committed mortgage fraud, which she denies. NBC News reported that Cook described her Atlanta condo on financial forms as a “vacation home,” which undermine's Trump's mortgage fraud allegations.

Cook sued and both a U.S. District Court and a federal appeals court in Washington, D.C., ruled the president's effort to remove Cook likely violated the Federal Reserve Act. Under that law, designed to insulate the central bank from political interference, Fed governors can only be removed "for cause," which is generally seen as some kind of malfeasance or dereliction of duty. Trump then issued an emergency appeal to the Supreme Court to overturn the lower court's ruling.

No president has fired a sitting governor in the 112-year history of the Fed, which was structured to be independent of day-to-day politics. The case presented the court with one of the more extraordinary efforts by Trump to expand presidential power.

During oral arguments in January, the justices casted doubt on Trump’s bid to wrest control of the nation’s central bank. Allowing Cook’s firing to go forward “would weaken, if not shatter, the independence of the Federal Reserve,” said Justice Brett Kavanaugh, one of three Trump appointees on the nation’s highest court.

At least five other justices on the nine-member court also sounded skeptical about the effort to remove her from office.

The true motivation for trying to fire Cook, Trump’s critics say, is the Republican president’s desire to exert control over U.S. interest rate policy. If Trump succeeds in removing Cook, the first Black woman Federal Reserve governor, he could replace her with his own appointee and gain a majority on the Fed’s board.

Trump has been dismissive of worries that cutting rates too quickly could trigger higher inflation. He wants dramatic reductions so the government can borrow more cheaply and Americans can pay lower borrowing costs for new homes, cars or other large purchases, as worries about high costs have soured some voters on his economic management.

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