WASHINGTON, Jan 20 (Reuters) – In the battle over President Donald Trump’s effort to fire Federal Reserve Governor Lisa Cook that is set to go before the U.S. Supreme Court on Wednesday, the justices may focus on the president’s use of social media to carry out this unprecedented action.
The justices are due to hear arguments over Trump’s request to lift a lower court judge’s decision barring him from firing Cook while her legal challenge to the removal continues. The justices in October agreed to hear the dispute, a decision that left Cook in her role for the time being.
Trump’s prolific use of social media is well-established. The Republican president long has used social media not only to voice opinions but also to announce major decisions and official government policies.
Here too, just after 8 p.m. last August 25, Trump posted to his Truth Social account a letter addressed to Cook informing her that “you are hereby removed” from the role of Fed governor. No president since the central bank’s founding in 1913 has ousted a Fed governor.
That action, Cook and her lawyers argue, violated her rights under the U.S. Constitution’s Fifth Amendment, which provides that no person may be “deprived of life, liberty or property without due process of law.”
The case, which could imperil the independence of the world’s most important central bank, prominently tests whether Trump had adequate “cause” under federal law to remove Cook. But it also is a fight over whether the way Trump sought to oust Cook was fair. Lower courts agreed with Cook that Trump’s action likely was not.
MORTGAGE FRAUD ALLEGATIONS
The president has based his bid to fire Cook on allegations by Federal Housing Finance Agency Director Bill Pulte, a Trump appointee, that she committed mortgage fraud. Cook, who was appointed in 2022 by Democratic former President Joe Biden as the first Black woman to serve in the post, has denied the allegations.
Cook’s lawyers contend that the allegations are a pretext to fire her based on her monetary policy stance. Trump has repeatedly demanded lower interest rates, also frequently lashing out at Fed Chair Jerome Powell for not doing so more quickly.
The Trump administration this month opened a criminal investigation into Powell over remarks he made to Congress last year about a Fed building project, a move the central bank chair similarly called a pretext aimed at gaining more influence over interest rates.
In creating the Fed, Congress passed a law called the Federal Reserve Act that included provisions to shield the central bank from political interference, setting out that governors could be removed by a president only “for cause” – though the law does not define the term or establish procedures for removal.
Cook’s case raises thorny questions concerning the scope of presidential power, the validity of Trump’s decisions that impact the central bank, and the authority of the judiciary to second-guess the president.
But the case also offers the court, which has a 6-3 conservative majority and has backed Trump in numerous decisions since he returned to the presidency last year, a way of deciding the case on procedural grounds that could leave some of those contentious, substantive questions to another day.
Cook’s lawyers have said that Trump’s letter on social media purporting to fire her without either notice in advance or an opportunity to respond to the allegations did not satisfy the constitutional requirements of due process.
“One way for the court to side with Cook would be to say that the process she received – generally characterized in such cases as notice and an opportunity to be heard – was insufficient,” said Jane Manners, a professor at Fordham Law School in New York who has studied the history of laws governing officer removal.
Although it is not entirely clear what kind of hearing would be required, Manners said legal precedents in this area show that removals need to follow a “judicial-type hearing involving the presentation of evidence and testimony, including from the officeholder.”
‘A PROPERTY RIGHT’
Trump’s Justice Department urged the Supreme Court to reject Cook’s argument, contending that a government officer’s position is not a form of property protected by the Constitution’s due process provision.
“Officers exercise significant government power, and no individual has a property right to such power,” the administration said in its written filing.
Even if the due process provision does protect someone in Cook’s position, the administration said Trump gave her the required notice when on August 20 he referenced on social media Pulte’s referral of the mortgage allegations to the Justice Department for criminal investigation, writing, “Cook must resign, now!!!”
Trump also gave her an opportunity to respond given that he did not post his letter firing her until five days later, the administration added.
“Cook had an opportunity to explain why no misconduct occurred, and she spurned it,” the filing stated.
Cook sued Trump in August after the president announced he would remove her.
U.S. District Judge Jia Cobb in September temporarily blocked Trump from carrying out his directive, ruling that he likely violated Cook’s due process rights and that the mortgage allegations likely were not a legally sufficient cause to remove her under the Federal Reserve Act as they relate to conduct that occurred before she was confirmed to the post by the Senate.
The Washington-based judge called it “doubtful that Cook should have been required to piece together the evidentiary basis for a ‘for cause’ removal from a scattered assortment of social media posts and news articles.”
The U.S. Court of Appeals for the District of Columbia Circuit refused Trump’s bid to put Cobb’s order on hold, prompting the administration to seek the Supreme Court’s intervention.
(Reporting by Andrew Chung; Editing by Will Dunham)
