The US Supreme Court appears reluctant to let President Trump fire Federal Reserve officials, signalling it views the central bank as uniquely independent.
WASHINGTON: The US Supreme Court’s conservative justices appear ready to endorse President Donald Trump’s power to fire a regulatory agency official despite job protections given by Congress.
However, they have signalled reluctance to give him similar authority over the Federal Reserve in a major case set for arguments next month.
The court, with a 6-3 conservative majority, in May cited the US central bank’s unique qualities that distinguish it from other independent agencies.
Trump nevertheless moved to fire Federal Reserve Governor Lisa Cook in August, setting in motion a legal battle that imperils the Fed’s longstanding independence.
Arguments are scheduled for January 21 over the legality of Trump’s attempt to remove Cook.
The court heard arguments on December 8 involving Trump’s March firing of Federal Trade Commission member Rebecca Slaughter.
The conservative justices indicated through their questions that they are poised to rule Trump did not overstep his authority in that case.
Based on those arguments, the justices seem ready to strike down a 1914 law that protects FTC commissioners from removal except for specific causes.
Such a ruling could empower presidents to fire the heads of other agencies Congress sought to make independent.
The 1913 law creating the Fed provided similar tenure protections, and the justices appear worried about a framework letting presidents remove Fed officials over policy differences.
Lawmakers and economists in both parties have long viewed Fed independence as crucial to preventing monetary policy from political whims.
Cook was appointed by Democratic former President Joe Biden.
Trump said he fired her for cause, accusing her of mortgage fraud, an allegation Cook denied and called a pretext.
In an earlier case, the Supreme Court in May allowed Trump’s firing of a National Labor Relations Board member to take effect.
But its order stated the action should not be interpreted as granting similar power to remove Fed officials.
“The Federal Reserve is a uniquely structured, quasi-private entity,” the order stated.
Justice Brett Kavanaugh has suggested in the past that the Fed enjoys a special status within the government.
During the Slaughter arguments, her lawyer said the Trump administration’s theories would put Fed independence “on the chopping block.”
Kavanaugh told US Solicitor General D. John Sauer, arguing for Trump’s administration, that he shared those concerns.
Sauer responded that the Fed is unique and that Trump’s administration is not currently challenging tenure protections for Fed officials.
“The court clearly sees the Fed as special,” said Peter Margulies, a law professor at Roger Williams University.
“I think the court is convinced that an independent Federal Reserve is crucial to a workable government.”
The US Chamber of Commerce argued in a legal brief that the Fed is different, so a ruling favouring Trump in the Slaughter case need not threaten central bank independence.
Some legal experts have said this view distorts the Fed’s history and structure.
Andrea Katz, a professor at Washington University School of Law, said the court’s ruling likely will create an exception for the Fed.
“But the justices have not articulated a principled legal rationale for doing so,” Katz said.
“As a historical matter, the so-called ‘Fed carve-out’ is intellectually indefensible.”
