The Supreme Court expressed worry over President Trump’s firing of Federal Reserve Governor Lisa Cook, suggesting Wednesday that it undermines the independence of the Fed and would invite retaliation by future presidents.
Justices across the ideological spectrum said they were concerned by the short shrift Mr. Trump gave to Ms. Cook, firing her with a social media post and denying her any chance to challenge the ouster as unfair or illegal, then arguing the courts had little role in refereeing the matter right now.
“That would weaken, if not shatter, the independence of the Federal Reserve,” said Justice Brett M. Kavanaugh, one of Mr. Trump’s appointees. “If this were set as a precedent, it seems to me, just thinking big picture, what goes around comes around.”
Justices repeatedly cited the unprecedented nature of the firing — the first time in 112 years that a president has found cause to boot a member from the Board of Governors.
But U.S. Solicitor General D. John Sauer said the malfeasance Ms. Cook is accused of — errors in claiming two primary residences, one in Michigan and one in Georgia, on mortgage applications — undermines the credibility of the Fed.
He said Mr. Trump was right to take action in a case where “there’s the appearance of playing fast and loose, or at least being grossly negligent, in getting favorable interest rates for herself.”
“What’s the message for ordinary Americans?” he told the justices. “The American people should not have their interest rates determined by someone who exercised gross negligence.”
The case is the latest in a string of lawsuits challenging Mr. Trump’s use of firing powers. The high court has been deferential in other instances, where the president has axed employees over policy differences at so-called independent agencies such as the National Labor Relations Board and the Federal Trade Commission.
Ms. Cook’s case is different. Mr. Trump said he had good cause to fire her, namely the mortgage application errors.
Justices raised a host of questions about that, wondering whether those errors, made on applications before she was appointed to the Fed, and not directly related to any actions taken at the Board of Governors, rise to the level of malfeasance necessary under the law Congress wrote.
“The president called it gross negligence. Who decides that issue?” said Justice Sonia Sotomayor, an Obama pick to the court.
Justices also wondered if Mr. Trump’s firing by Truth Social post, without hearing from Ms. Cook, was sufficient due process.
“He’s provided adequate process,” Mr. Sauer responded.
Several justices suggested the case was rushed to the high court too quickly. Justice Samuel A. Alito Jr., a George W. Bush appointee, questioned whether the mortgage applications at issue were even part of the record in the case.
“Is there any reason why this whole matter had to be handled by everybody — by the Executive Branch, by the district court, by the D.C. Circuit — in such a hurried manner?” he said. “No court has ever explored those facts.”
Justice Kavanaugh said that if a president could carry out a firing in the way Mr. Trump has, it might undermine the for-cause restrictions Congress wrote into the law. He said presidents would seek “trivial” offenses to justify for-cause firings of those who disagreed with the White House on interest rate policy.
“It incentivizes a kind of search and destroy,” he said. “What are we doing when we have a system that incentivizes that?”
The specific issue before the high court is whether Ms. Cook can remain on the job while the case continues to develop in lower courts. The justices previously said she could, at least until they gave a fuller hearing to the matter.
Both Democratic and Republican appointees wondered what the harm would be to Mr. Trump to let Ms. Cook stay on for now. They pointed out that Mr. Trump isn’t arguing Ms. Cook is undermining him, since Mr. Sauer conceded the removal wasn’t over policy differences.
“I’m not sure we have evidence here that Ms. Cook is an immediate threat to the public,” Justice Ketanji Brown Jackson, a Biden appointee, said.
Paul Clement, Ms. Cook’s lawyer in Wednesday’s argument, said the errors were “at most an inadvertent mistake” and not the deceit or fraud the administration has suggested.
He said the president prejudged the issue by first posting on Truth Social that Ms. Cook should resign and two days later adding, “Resign or be fired!”
“The president can’t be the final decision maker,” Mr. Clement said. “You can’t start by prejudging the issue.”
In addition to the removal fight, Ms. Cook has been referred to the Justice Department for investigation over her mortgage form.
President Biden nominated Ms. Cook to the Board of Governors in 2022, and she was confirmed on a 51-50 vote, with Vice President Kamala Harris breaking the tie.
Ms. Cook was the first Black woman to reach that body.
Republicans argued at the time that Ms. Cook, a professor of economics at Michigan State, lacked relevant experience in interest rate policy.
She was confirmed to a full 14-year term in 2023 on a 51-47 vote.
