A December court case could set a precedent before the January 21 arguments date
The ongoing effort of the Trump administration to fire a Federal Reserve governor will have its day at the Supreme Court early in 2026.
The Supreme Court announced on Wednesday that oral arguments in the case challenging President Donald Trump’s legal authority to fire Fed governor Lisa Cook will be heard on January 21.
Trump announced on August 25 that he was firing Cook for alleged mortgage fraud. She sued to keep her position.
A federal district court judge ruled that Cook couldn’t be fired while the lawsuit was pending, a ruling upheld by the US Court of Appeals for the District of Columbia. Solicitor General D. John Sauer argued that the case “involves improper judicial interference with the President’s removal authority,” and urged the justices to freeze a lower court order that reinstated Cook.
Trump then asked the Supreme Court to take up the matter.
“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,” the administration said.
In October, the Supreme Court declined to remove Cook until it could hear arguments.
Fed independence
Some critics believe that the court's decision granting the president the power to fire a Fed governor at will could undermine the Federal Reserve's independence.
Kenneth Katkin, law professor at Northern Kentucky University’s Chase College of Law, believes the Supreme Court’s eventual ruling will decide Fed independence.
“When you talk about the Fed independence, that's really what the Supreme Court will be deciding,” Katkin told Mortgage Professional America. “Whether we still have the principle of Fed independence or not. I think as long as the lower courts are deciding it, the laws that exist are crafted the way they are to preserve Fed independence.”
Humphrey’s Executor
A case the Supreme Court will hear first is a challenge to the 90-year-old Humphrey’s Executor, on December 8 in Trump v. Slaughter.
Humphrey’s Executor protects the so-called “fourth branch” of the government. It keeps organizations like the Fed and the Federal Trade Commission, which are not cabinet positions, from having members fired by the president without cause.
“In Humphrey's Executor v. United States, the Court drew a distinction between ‘executive’ officers like the Secretary of War or a postmaster, who could be fired by the President under the Myers precedent, versus ‘quasi-legislative’ or ‘quasi-judicial’ officers of multi-member ‘independent’ federal agencies like the Federal Trade Commission,” Katkin said.
“The Court held that the latter may be removed only with procedures consistent with statutory conditions enacted by Congress. Thus, the President could not fire a member of a multi-member ‘independent’ board or commission solely for political reasons.”
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Katkin expects the Supreme Court to overrule Humphrey’s Executor in December, which could pave the way for Cook’s termination, or even Jerome Powell’s if the president feels like he’s not cutting rates fast enough.
“The current Court has generally supported a ‘unitary executive’ theory of the presidency which is somewhat inconsistent with the approach taken by the Humphrey's Executor court in 1935,” Katkin said. “Many observers expect the Court to overrule or weaken Humphrey's Executor this year. If that happens, then the President would gain the constitutional authority to fire the Fed chair.”
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