When his power to oust a Federal Reserve governor came up for review, Donald Trump’s government received some rough questioning from his friendly right flank of the Supreme Court on Wednesday.
During a 48-minute live stream that ran the legal gamut, Legal AF’s Michael Popok and I discussed why a lopsided ruling against the government appears likely. We also discussed a setback regarding the release of the Epstein files and Lindsey Halligan’s exit from her “masquerade” as a U.S. Attorney.
Here are some quick takeaways on today’s arguments in Trump v. Cook.
Trump DOJ demands unreviewable power
The position of Trump’s former lawyer turned solicitor general John Sauer couldn’t have been clearer or more extreme. Once Trump decides to remove someone from the Federal Reserve, that decision is unreviewable. There is no hearing or any other due process. Social media is an adequate notice, and the accused may choose to reply to that post online.
Even some of the most conservative justices bristled at that proposition.
"Your position that there's no judicial review, no process required, no remedy available, very low bar for cause — that the President alone determines — and that would weaken if not shatter the independence of the Federal Reserve," Justice Brett Kavanaugh told Sauer.
Brave new world of due process
In August, Trump posted that he would fire Federal Reserve Gov. Lisa Cook, accusing her of “apparent” mortgage fraud.
Justice Samuel Alito noted that the government didn’t even support the allegations with Cook’s actual mortgage fraud application in any of the lower court litigation.
"Are the mortgage applications even in the record in this case?" Alito asked.
"I know that the text of the social media post that screenshots of the mortgage applications is in the record," Sauer replied.
Justice Sonia Sotomayor scoffed at Sauer’s suggestion that Cook missed the opportunity to reply on social media when her lawyer denied the accusations in a letter.
"This is a new standard I've never heard of before,” Sotomayor said drily. “In an informal proceeding, the president can go by social media, and one believes that that is adequate notice under law. I'm hard pressed to think that a letter from a lawyer is not notice from the adversary."
Two lower courts blocked Trump’s attempted ouster, primarily on due process grounds.
Jerome Powell keeps watch
Federal Reserve chair Jerome Powell, who announced that Trump’s Justice Department is criminally investigating him, attended the oral arguments, which garnered international attention about the independence of the U.S. central bank.
Justice Amy Coney Barrett noted that some of the amicus briefs the court received were alarming.
“We have amicus briefs from economists who tell us that … if we grant you your stay, that it could trigger a recession,” Barrett said. “How should we think about the public interest in a case like this?”
The details matter
Assuming the Court rules in favor of preserving the Federal Reserve’s independence, the details of the opinion can reveal how or when Cook keeps her job.
The Court could decide what form of due process should be provided and what qualifies as “for cause” under the Federal Reserve Act. If allegations of fraud predating her tenure do not count, the basis for ousting Cook evaporates.
Cook’s attorney Paul Clement, a staunchly conservative lawyer and former solicitor general under George W. Bush, noted that no president since Woodrow Wilson signed the Federal Reserve Act tried to remove a governor before Trump’s second term. Clement added that there would have been no reason for the Act to include for-cause protections under the government’s theory.
“If there's no judicial review, then all of this is a joke,” he said.
Chief Justice John Roberts suggested that the court could, on the record before it, decide whether Cook’s alleged actions are removable or, if a paperwork error, merely negligent.
Arguments ended without a ruling after two hours.
Watch the full breakdown in the video at the top of this newsletter.
