Supreme Court agrees to hear arguments in case on Federal Reserve independence, leaving Lisa Cook in job for now

By John Fritze, CNN

(CNN) — The Supreme Court agreed Wednesday to decide whether President Donald Trump can temporarily fire Lisa Cook from the Federal Reserve, setting up a blockbuster showdown over the independence of an agency with vast power over the American economy.

Cook will remain on the job until the court holds oral arguments – set for January – and decides what to do with the president’s appeal. That move came despite Trump’s request for Cook to be removed immediately.

In that sense, the order was a win for Cook – and a rare instance in which the court has decided against quickly jettisoning federal officials Trump has fired.

The high court’s brief and unsigned order came months after a majority of justices appeared to draw a line of protection around the Fed, calling the rate-setting agency a “uniquely structured” entity with a “distinct historical tradition” shielding it from presidential politics – even as the court has permitted Trump to fire leaders at other agencies, like the Federal Trade Commission.

Trump fired Cook in late August after a member of his administration alleged that she had committed mortgage fraud by reporting two different homes as her primary residence – a practice that can yield better loan terms. Other documents have subsequently revealed that Cook sometimes declared the second property as a “vacation home.” Cook has called those charges “manufactured” and argued that no court has reviewed them.

If Trump is ultimately successful in dismissing Cook, it would mark the first time a Fed governor was fired by a president in the central bank’s 111-year history.

The Supreme Court’s 6-3 conservative majority has allowed Trump to fire leaders at several agencies that, while they exist within the executive branch, Congress set up to have a degree of independence from the president. Lawmakers attempted to create that independence by requiring a president to show cause – such as malfeasance – before firing its leadership, a practice the Supreme Court upheld in a key 1935 decision.

This year, the court has at least temporarily permitted Trump to fire leaders at several of those agencies without cause – including at the FTC, the Consumer Product Safety Commission, the National Labor Relations Board and others. In one of those decisions, back in May, the court notably said its decision didn’t implicate the Federal Reserve, differentiating it from the lesser-known labor agencies at stake in the case.

But Trump attempted to fire Cook under different circumstances. Rather than dismissing her at will, the president said that the mortgage fraud allegations qualified as cause.

A federal court on September 10 blocked the move, finding that Trump had not “identified anything related to Cook’s conduct or job performance as a board member that would indicate that she is harming the board or the public interest.” A federal appeals court declined to put that order on hold, and Trump quickly filed the emergency appeal at the Supreme Court.

Perhaps sensing that some justices might be uneasy with letting a president meddle with the central bank, Cook argued that siding with Trump would “eviscerate the independence” of the Fed and she warned that it could lead to “chaos and disruption” for US markets.

Trump has been sharply critical of the Fed, especially Chair Jerome Powell, for keeping rates high, and critics say the administration’s real goal in targeting Cook has been to pressure the agency. The Federal Reserve cut its benchmark interest rate earlier this month for the first time since December and signaled more cuts are likely this year. Cook voted in favor of that reduction.

The Supreme Court already agreed this term to hear arguments about the power of a president to fire leaders of independent agencies. That case – centered on Rebecca Kelly Slaughter, who Trump fired from the FTC – has squarely lined up the question of whether the court should overturn its 1935 precedent, Humphrey’s Executor v. US. Humphrey’s, which also dealt with the FTC, allowed Congress to require presidents to show cause before dismissing board members overseeing independent agencies.

This story has been updated with additional details.

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