The Fed-firing case in three steps

Major Questions is a recurring series by Adam White, which analyzes the court’s approach to administrative law, agencies, and the lower courts.

Like the still-pending tariffs case, Wednesday’s oral arguments in Trump v. Cook will attract attention far beyond the usual court-watchers. The president’s attempt to fire a Federal Reserve governor raises enormous questions for global markets and American law – all the more so after the latest news of a Justice Department investigation of Fed Chairman Jerome Powell, and Powell’s denunciation of it. When the justices gather to hear oral arguments, the world will be watching.

But what, exactly, will we be watching?

The great irony of Trump v. Cook is that this momentous case arrives at the court half-baked. The factual record surrounding President Donald Trump’s firing of Fed Governor Lisa Cook is extremely thin and contested. The main substantive issue – can Trump lawfully fire Cook “for cause,” under the Federal Reserve Act? – is a messy mix of both law and fact. And because this case arises from a district court’s preliminary injunction, it also raises equitable and prudential questions about courts temporarily blocking the president’s removal of a senior agency officer.

Had Trump v. Cook arrived on the court’s normal merits docket, the issues would be set forth much more cleanly, with court-certified “Questions Presented” and perhaps a more useful factual record. But this case arrived much differently.

The formal dispute between Trump and Cook began in August with her firing, but the broader fight between Trump and the Federal Reserve began long ago. Throughout the first months of his new administration, Trump denounced the Federal Reserve’s interest-rate policy and threatened to fire Powell. Then, in August, the administration’s Federal Housing Finance Agency suddenly released one of Cook’s old mortgage applications – part of FHFA’s disconcerting new trend of investigating the mortgage applications of Trump’s perceived enemies. Because that application marked a property of Cook’s as a “primary residence” rather than a “vacation home,” FHFA Director Bill Pulte accused Cook of mortgage fraud – and President Trump, in turn, immediately took to social media to call for her resignation.

Five days later, on Aug. 25, the president sent Cook a letter announcing that he was firing her “for cause,” pursuant to the Federal Reserve Act.

Cook sued three days after, seeking a federal district court order to keep her in office while the litigation played out. About two weeks later, the judge granted her a preliminary injunction. The Justice Department quickly appealed and sought to stay the injunction – a request that the U.S. Court of Appeals for the D.C. Circuit denied, with a written opinion and a dissent, just four days later. And a day after that, Reuters published a story casting significant doubt on the narrative that Cook’s mortgage application was an attempted fraud.

The case arrived at the Supreme Court on Sept. 18, with the Justice Department’s application to stay the district court’s injunction. And just two weeks later, the court declined to grant the stay – thus leaving Cook in office – and set the case for oral argument in January.

So here we are. But, again, where exactly are we? That is, what exact questions will the court actually decide in this case?

It is hard to overstate how fundamentally Trump and Cook disagree in framing even the basic premises of this dispute. They even disagree implicitly over whether Cook is, in fact, fired: Trump’s brief argues against Cook’s “reinstatement,” while Cook argues against Trump’s “purported removal.”

Certain things are somewhat clear, however. This case is, to be sure, not a constitutional challenge to the Federal Reserve’s independence. Though the Trump administration obliquely raised that question in its original brief in the district court, it has not pressed that question in court. And sensibly so, since in May the court explicitly said that the Fed’s independence might rest on stronger constitutional footing than other agencies. (Though it must be noted, even Trump’s early 2025 order extending White House control over independent agencies notably steered clear of the Fed’s monetary powers.)

So, the main question before the court is not whether the president can ignore the Federal Reserve Act, which grants Fed governors a 14-year term and allows presidents to fire them only “for cause.” Rather, the question is whether Trump complied with the Act when he fired Cook – and what, if anything, can the courts do to review that firing and to freeze the firing while they undertake that review.

As I look ahead to oral arguments – which we’ll be live blogging here at SCOTUSblog – I think this case is best understood in terms of three questions:

First, a question of legal interpretation: what does “for cause” mean in the Federal Reserve Act?

When Trump claims that he has “cause” to fire Cook, he is making both a factual claim and a legal argument. Setting aside the facts for a moment, the legal question is fascinating and difficult. Cook argues that when Congress re-enacted the “for cause” provision in 1935, it implicitly incorporated both a deep body of common law about “for cause” protections, and also (pointing to legislative history) a specific removal standard, “inefficiency, neglect of duty, or malfeasance in office,” found in, for example, the Federal Trade Commission’s statute.

Trump, meanwhile, argues that the Fed’s “for cause” statute allows him much broader latitude to fire Fed governors for “misconduct, incompetence, failure to perform statutory duties, and any other faults ‘implying an unfitness for the place.’”

Faced with these profoundly different interpretations of “for cause,” the justice might well land somewhere between the two, with a reading of “for cause” that requires a kind of germaneness to both the Fed governors’ duties and Congress’ general goal of protecting the nation’s central banking system from normal politics. But I cannot pretend to guess where, exactly, they will land.

Second, a question of process: how does our federal government decide whether a Fed governor should be removed from office?

The briefs in this case raise at least three questions that touch on process: Was Cook entitled to notice and a hearing before the president announced her firing? Can the courts undertake judicial review of the president’s decision? And can the courts preliminarily enjoin that decision, leaving Cook in office while the full judicial-review process plays out?

As to the notice-and-hearing question, Trump’s final brief begins with what strikes me as his strongest point – that neither the Constitution nor the Federal Reserve Act entitles Cook to an administrative hearing before her firing is finalized. On that point, Cook argues in both her supplemental brief and her earlier brief (and with which the D.C. Circuit agreed) that the Act and the Fifth Amendment entitle her to notice and a hearing prior to termination, but she does not specify what, exactly, that process would look like in practice. For what it’s worth, I have trouble envisioning the spectacle of such a pre-termination administrative hearing, and I suspect many justices will, too.

So on to the next question, which concerns whether the courts can review Cook’s firing in the first place. Here, I think Cook is on much stronger ground. The president’s final brief asserts that “when, as here, the President provides a cause, courts may not review his factual findings or his application of the for-cause standard to the facts, or otherwise second-guess his judgment that the removal is justified.”

This calls to my mind the DOJ’s assertion, in the still-pending tariffs case, that a president’s declarations of national emergency are “essentially unreviewable” by courts. The notion that courts can’t second-guess the factual basis of an “emergency” declaration has always struck me as probably right, but such claims of unreviewability seem much less convincing here, for exactly the reason that the Chamber of Commerce’s amicus brief puts so well, in that “a lack of judicial review would render the for-cause protection meaningless.” As this brief elaborates:

[T]he government’s position is that the President may remove a Federal Reserve Governor so long as he identifies any reason at all—regardless whether that justification fits within the meaning of “cause” under the statute or whether the President’s stated reason has any basis in fact. That standard is no standard at all. … [It would] subordinate the substance of the Board of Governors’ for-cause removal protections to the use of magic words by the President. That is not what Congress intended when designing the Federal Reserve and entrusting it with the Nation’s monetary policy.

I’d guess that this will resonate among the justices much better than the president’s unreviewable-firings view of the Federal Reserve Act.

That said, I am curious to see how the justices’ sense of the administrative process relates to their sense of the judicial process. As I noted earlier, I am deeply skeptical that the justices will hold that Cook was entitled to an administrative process before Trump fired her. But I am just as skeptical that the justices will hold that she is entitled to no post-decision process in court.

Indeed, the most sensible process for a Fed firing might just be the one that we’ve seen in this very case: a preliminary injunction from the district court – which the Supreme Court has left in place – followed by a rather fast track through the circuit court to the Supreme Court. Thus, maybe the justices already have signaled their sense of the right “process” for Fed firings.

Finally, a question of fact: if the courts review a Fed firing, then how much factual evidence will it take to sustain the president’s decision?

As I noted above, when the Justice Department argues that Trump had “cause” to fire Cook, they are making both a legal argument and a factual argument: how to interpret “for cause” as a matter of law, and whether there is “cause” here as a matter of fact.

Trump’s final brief (quoting his August 25 letter) highlights these factual findings: “He found that, because of Cook’s ‘deceitful and potentially criminal conduct in a criminal matter,’ the American people cannot ‘have such confidence in [her] integrity.’ .. He also found that, at a minimum, her ‘gross negligence in financial transactions’ ‘calls into question [her] competence and trustworthiness as a financial regulator.’” Again, these findings are simply the conclusions that Trump draws from a single document, findings that might well be implausible in light of the other documents that Cook and journalists have highlighted.

If a court can hear a case challenging a Fed firing, then how should it grapple with such factual assertions? Should the judge defer completely to a president’s factual judgments? Should the judge undertake a kind of de novo (from scratch) review of the facts – and, if so, then on what kind of record would she make her own findings?

I doubt that the Supreme Court will tell the district judge to decide the factual questions de novo. But I would not be surprised to see the justices instruct the district court to give significant deference to a president’s factual findings.

Indeed, to bring all three of my aforementioned questions back together: if the justices interpret the Act’s “for cause” provision in a way that puts meaningful limits on the kind of issues that a president can invoke to fire a Fed governor, and if they hold that a purported firing can be challenged in court (with a preliminary injunction delaying the firing), then perhaps the justices will be inclined to make the factual part of judicial review very deferential. Perhaps the justices will hold if a president identifies materials that can be construed as grounds for “cause” under the Act, and if there is not strong counterevidence of pretext on the president’s own part, then the district court should defer to the president’s factual judgment.

Which is to say, the court might save the Federal Reserve Act, but not this particular Federal Reserve actor.