WASHINGTON — The Supreme Court for the past year has repeatedly allowed President Donald Trump to fire heads of independent agencies, but it appears to be drawing a line with the Federal Reserve.
The court has signaled for months that it sees the Fed in a different light. It has said that the president can fire directors of other agencies for any reason, but can remove Fed governors only “for cause,” which is often interpreted to mean neglect of duty or malfeasance.
Last year, the court allowed President Donald Trump to fire — at least temporarily — Gwynne Wilcox, a member of the National Labor Relations Board, and Cathy Harris, a member of the Merit Systems Protection Board, but it carved out a distinction for the Fed. The two officials had argued that if Trump could fire them, he could also fire members of the Fed’s board of governors.
“We disagree,” the court said then. “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.”
That is now being put to the test in a case in front of the Supreme Court involving Trump’s attempt to remove Fed governor Lisa Cook. On Wednesday during oral arguments, the court seemed inclined to keep Cook in her job.
Allowing Cook’s firing to go forward “would weaken, if not shatter, the independence of the Federal Reserve,” said Justice Brett Kavanaugh, one of three Trump appointees on the nation’s highest court.
But the court largely skirted a key issue: What, exactly, is the legal principle that protects the Fed, but not the other agencies?
Several legal experts say the justices are on shaky ground. The Fed, they argue, is similar in many ways to the Federal Trade Commission or the National Labor Relations Board, agencies Congress intended to be independent but whose officials Trump has been able to fire without pushback from the high court.
“There’s no historical grounds for distinguishing the Fed from other independent agencies that Congress has designed,” said Jane Manners, a law professor at Fordham University. “The whole argument was premised on the idea that the Fed is different. They haven’t explained exactly why.”
Peter Conti-Brown, a professor of financial regulation at the University of Pennsylvania, added, “I’ll say as a legal scholar and as a historian I think that differentiation is hocus pocus.”
Just last month, the court signaled in a separate oral argument that it would likely allow Trump to fire FTC Commissioner Rebecca Slaughter. The conservative majority on the court also suggested it would overturn a 90-year-old precedent that sharply limited the president’s ability to fire top officials at independent agencies