Supreme Court weighs Trump bid to fire Fed governor Lisa Cook

The Supreme Court will review President Donald Trump's attempt to fire Federal Reserve Governor Lisa Cook on Wednesday — a consequential and closely watched case that could give Trump an unprecedented level of influence over the nation's central bank.

Lawyers for the Trump administration asked the high court last fall to stay a lower judge's ruling that blocked Trump from immediately firing Cook from her post on the Federal Reserve's Board of Governors until the court could consider a lawsuit she filed challenging her removal. 

The Supreme Court agreed to take up the case in October, but said Cook could remain in her post pending review — marking a rare instance in which justices on the conservative-majority court have rejected the administration's request for emergency intervention. 

That could be in part due to the novelty of the case. If successful, Trump's removal of Cook would mark the first time that a president has ever fired a sitting Fed governor in the bank's 112-year history. 

It also comes as tensions between Trump and the Fed have soared to a fever pitch. 

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At issue in the case is whether Trump has satisfied a necessary "for cause" provision to fire Cook from the Fed's powerful, seven-member board. Trump announced his plans to fire Cook in a social media post in August, citing allegations of mortgage fraud leveled by Trump administration official Bill Pulte.

Cook, for her part, has vehemently denied the allegations, which she described as "manufactured charges" designed to create a pretext for her removal. No charges have been brought against her to date. 

Her lawyers will argue in court Wednesday that Trump's attempt to fire her is "unprecedented and illegal," and a thinly veiled effort by Trump to wrest control over the Fed. 

"Granting that relief would dramatically alter the status quo, ignore centuries of history, and transform the Federal Reserve into a body subservient to the president’s will," Cook's lawyers said in a Supreme Court filing.

Meanwhile, lawyers for the administration will argue that Trump's removal protection powers are discretionary under federal law. 

"Put simply, the president may reasonably determine that interest rates paid by the American people should not be set by a governor who appears to have lied about facts material to the interest rates she secured for herself— and refuses to explain the apparent misrepresentations," U.S. Solicitor General D. John Sauer told the Supreme Court in appealing the case. 

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Justices have the option to either review the case narrowly — ruling only on whether it should leave the lower court’s ruling in place — or to bring into the fold the larger constitutional questions that the case has rough to the fore, including the legality of Trump’s effort to fire Cook under the Federal Reserve Act and other similar laws designed to insulate the bank from political pressures.

Wednesday's case is not the first time the high court has been tasked with reviewing the legality of Trump's attempt to fire the head of an independent, multi-member federal agency.  

The Supreme Court in December heard oral arguments in Trump v. Slaughter, a case centered on Trump's firing of FTC member Recca Slaughter, without cause. Slaughter sued to challenge her removal, but the high court declined to leave her in the role pending arguments.  

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Though Trump administration officials have insisted that the case is narrowly focused on Cook’s removal, the oral arguments as a whole will be scrutinized by major players in financial markets, including investors, bankers, and business owners for signs as to how the high court might rule. 

The short-term ripple effects could be felt sooner than later, with the next Federal Open Market Committee meeting slated for later this month. 

Trump has repeatedly blasted Fed Chair Jerome Powell and other members of the central bank over its reluctance to lower benchmark interest rates as aggressively as he would like, deepening the fast-growing fault lines that have routinely pitted Trump against Fed leaders. 

Powell said that the agency was subpoenaed by the Justice Department last week over allegations that he lied to Congress about the costs of a massive renovation of its headquarters. 

Powell said he plans to attend Wednesday's oral arguments.