The Supreme Court and the Federal Reserve Board

Another day, another crisis brought to you by Donald Trump and the Supreme Court.

Last night, Trump purported to try and fire Lisa Cook, a governor on the Federal Reserve Board, via a Truth Social post. Allowing the president to control the Fed would be disastrous for the economy and that’s putting it lightly. The Fed makes expert judgments based on the country’s long term economic interests, including economic stability, when it comes to interest rates, inflation, the labor market, bank reserves, and more. Donald Trump, well, … you know, doesn’t really seem to make decisions in that way.

The fact that it would be so disastrous for the economy to hand Trump unfettered control over the Fed is why the Republican appointees on the Supreme Court invented a rule, last May, that said Presidents can remove any agency head they want … except for the governors of the Federal Reserve Board. But here’s the thing: That exception was garbled bullshit; the Court has given Trump an ever-expanding set of powers even as he’s acted like a maniac; and the Court has often gone back on the limits it offers to its revanchist decisions. So what did they expect? They’re the ones that paved the way for this guy to feel like he’s above the law – and to be above the law in important respects.

Some brief legal background: In the 1935 decision Humphrey’s Executor v. United States, the Supreme Court said it is constitutional for Congress to create agencies that are led by people that can’t be fired by the President “at will”--that is, because the President wants them to pursue the president’s priorities and the president’s preferred policies. Rather, Congress can limit the president to removing these officials for cause; we don’t know exactly what for cause means, but it’s got to mean something more than simple disagreement–something more like an agency head stops showing up to work, or is convicted of a felony, and so on. Agencies that are led by people who are removable only for cause – and not at will - are known as "independent agencies.”

The right-wing legal movement is not a big fan of independent agencies. They’ve embraced a theory, the unitary executive theory, that maintains independent agencies are unconstitutional because presidents are supposed to be all powerful rulers that control the executive branch. That’s a simplification, but the theory maintains that because all executive power is vested in the president, the president must be able to control, via the power to remove, all officials who exercise significant executive power. And that includes officials that Congress has, by law, protected from presidential removal – the unitary executive theory allows the president to violate those laws.

Project 2025 had called for the next Republican administration to call for Humphrey’s Executor to be overruled. Trump’s DOJ sent a letter to Congress informing them that they would, indeed, be asking the Supreme Court to overrule Humphrey’s. But the administration apparently couldn’t wait for the Court to do so. So Trump went ahead and fired the heads of several independent multimember commissions, including the NLRB, MSPB, and CPSC.

In May, the Republican justices said … that’s fine, effectively overruling Humphrey’s Executor (without mentioning it) and telling the president he could violate statutes that limited his power to remove agency officials. “Because the Constitution vests the executive power in the President, see Art. II, §1, cl. 1,” the Republican justices pronounced, “he may remove without cause executive officers who exercise that power on his behalf, subject to narrow exceptions.” That’s the unitary executive theory.

BUT - but they added - the Constitution doesn’t allow the president to fire the officials who lead the Federal Reserve Board. Why? “The Federal Reserve is a uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States.”

LOL. That sentence doesn’t remotely approximate law; it’s garbled, incoherent word salad. And Donald Trump treated it as such when he went ahead and fired a governor of the Federal Reserve Board anyways. (What the Republican justices really meant was “the Fed is too important or whatever” and “we like the unitary executive theory, but not enough to crash the economy.”)

In even more transparent nonsense, Trump’s Truth Social post claims he’s complying with the statute – insisting he has “cause” for firing Lisa Cook. (The cause being Bill Pulte’s allegations and supposed investigation into Cook of mortgage fraud.)

It’s possible the Supreme Court will weigh in on this dispute – Cook has said she’s going to fight. It’s possible they will say there isn’t cause; it’s possible they will say courts can’t review the president’s determination that there is cause; it’s possible they wills ay courts have to give the president’s cause determination significant deference; who knows.

My point is that no one – no one - should give the Supreme Court any credit for an incoherent sentence that said “please don’t fire the heads of the Fed, sir” even as they gave the president the expansive power to violate a bunch of statutes governing independent agencies. These are the guys who gave Trump immunity from criminal prosecution last summer - and the power to violate a bunch of federal laws this spring with no consequences whatsoever. They are the ones that have doubled down on the unitary executive theory, even in the face of how disastrous the theory is in operation.

It’s never just Donald Trump or Trump blowing through the guardrails. It’s the fact that people - and institutions like the Republican-controlled Supreme Court - enabled him, often by eliminating or weakening the guardrails before he bulldozed right through them.

Leah Litman is co-host of Strict Scrutiny and the author of the recent New York Times Bestseller LAWLESS: How the Supreme Court Runs on Conservative Grievance, Fringe Theories, and Bad Vibes