Trump Again Escalates Power Grabs in Bid to Fire Fed Member
"President Trump claimed he has cause to remove a member of the independent board who has not obeyed his demands to vote for lower interest rates.
Charlie Savage has been writing about presidential power and legal policy for more than two decades.
President Trump’s bid to fire a member of the Federal Reserve board is a new escalation of his efforts to amass more power over American government and society: Congress generations ago structured the agency, crucial to the health of the economy, to be independent of White House control.
In purporting to fire the board member, Lisa D. Cook, Mr. Trump is setting up another test of how far the Republican-appointed supermajority on the Supreme Court will let him go in eroding the checks and balances Congress has long imposed on executive power.
His attempt to fire Ms. Cook presents a new twist. It raises the question of whether he alone can decide whether there is cause to fire an official at an independent agency whose leaders are protected by law from arbitrary removal — or whether courts will be willing and able to intervene if judges believe his justification is a pretext.
But the move to oust Ms. Cook, whom the Senate confirmed for a term that ends in 2038, also fits into a now familiar arc, joining the various ways Mr. Trump has systematically accumulated greater authority.
Mr. Trump has stretched the bounds of some legal authorities, like prolifically declaring emergencies to unlock more expansive power, sending troops into the streets of American cities, unilaterally raising import taxes and blocking spending Congress had directed. In this case, he is pushing at the limits of a statute that says Fed board members serve 14-year terms unless removed “for cause” by a president.
Mr. Trump has also openly weaponized government power in ways that post-Watergate norms had forbidden, including directing the Justice Department to investigate perceived foes. In this case, a loyalist he installed atop the Federal Housing Finance Agency has scrutinized mortgage documents associated with various people Mr. Trump does not like, apparently finding a discrepancy in two loan applications Ms. Cook submitted in 2021.
And Mr. Trump has unabashedly violated statutes in which Congress set limits on when various types of officials may be fired, while seeking rulings striking down those laws as unconstitutional constraints on his powers. The restrictions apply to an array of officials, including board members of other independent agencies, inspectors general and civil servants.
But in telling Ms. Cook he was firing her, Mr. Trump invoked a provision Congress wrote into the Federal Reserve Act that says Fed board members may only be removed before their terms are up for cause. He said he had determined that sufficient cause existed to remove her.
That provision does not define what counts as a sufficient reason. In general, such provisions have been understood to mean something like significant misconduct or neglect of office.
The moves come as the Federal Reserve remains in Mr. Trump’s cross hairs, with the president pressuring the central bank to lower interest rates. He has also repeatedly threatened to fire the Fed chairman, Jerome H. Powell, citing cost overruns in its project to renovate the headquarters.
Minutes from the board’s July meeting, which were made public last week, showed that the two Trump appointees on the seven-member board wanted to lower interest rates. But the rest, including Ms. Cook, thought they should be held steady among mixed economic data, including weakening job numbers and a still-elevated inflation rate.
Congress enacted the law forbidding presidents from firing Fed board members without cause, making it an independent agency, to shield it from political pressures. The idea is to allow the board to decide on consequential matters like raising and lowering interest rates based on the long-term health of the economy, not short-term political interests.
The conservative legal movement, whose adherents now control the Supreme Court, has long wanted to reinterpret the Constitution to eliminate Congress’s ability to restrain presidents seeking to fire officials who exercise executive power — the so-called unitary executive theory. But even many conservatives have recoiled at the prospect of ending the independence of the Federal Reserve.
In a decision in May allowing Mr. Trump to remove Democratic-appointed members of the National Labor Relations Board and the Merit Systems Protection Board before their terms were up, members of the Supreme Court’s majority appeared to signal that they did not want to mess with the Fed’s independence.
The majority, noting that the fired officials on those boards had argued that allowing Mr. Trump to dismiss them without cause would undermine similar laws protecting the independence of the Fed, wrote: “We disagree.”
The opinion explained that the Fed was different because it is “a uniquely structured, quasi-private entity” that followed from a distinct historical tradition dating back to the country’s first national bank, which Congress established in 1791.
But Mr. Trump is now moving against the Fed’s independence anyway — albeit in a slightly different way.
On paper at least, Mr. Trump is purporting to fire Ms. Cook for a cause. In a letter he posted to social media on Monday, he cited allegations that in 2021, before she became a member of the Fed board, she falsely called two different properties her primary residence. That status allows someone to secure better loan terms.
The allegation was put forward by a Trump loyalist leading the Federal Housing Finance Agency, William J. Pulte. He has also accused New York’s state attorney general, Letitia James, of similar misrepresentations on mortgage documents. Ms. James earlier won a civil fraud case against Mr. Trump for manipulating the values of his properties to mislead lenders and insurers.
In a statement, Ms. Cook’s lawyer, Abbe Lowell, said Mr. Trump’s move lacked “any proper process, basis or legal authority,” and vowed to “take whatever actions are needed to prevent his attempted illegal action.” And Ms. Cook said she did not recognize Mr. Trump’s effort to fire her as legitimate and would continue to serve in her position.
“President Trump purported to fire me ‘for cause’ when no cause exists under the law, and he has no authority to do so,” she said in a statement. “I will not resign.”
Should a courtroom fight emerge, the case appears likely to turn on two issues: First, whether what counts as sufficient cause is up to the president alone to decide or if courts can adjudicate whether the standard has been met.
If courts do declare they have the power to review whether there was sufficient cause, the second issue is whether they will reject Mr. Trump’s move against Ms. Cook as a pretext or whether they will say the specific allegations in this instance are good enough to defer to his view.
In his letter, Mr. Trump appeared to gesture toward the argument that his determinations cannot be second-guessed. He cited the provision of the Federal Reserve Act that says Fed board members may only be “removed for cause by the president” but added a phrase not in the statute, saying it was up to his discretion whether that standard was met.
“The Federal Reserve Act provides that you may be removed, at my discretion, for cause,” Mr. Trump wrote. “I have determined that there is sufficient cause to remove you from your position.”
Charlie Savage writes about national security and legal policy for The Times."
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