By Dr. Jonathan Newman

The Supreme Court said more than they needed to in Trump v. Cook. Their narrow task was to decide whether Lisa Cook should be allowed to remain on the Federal Reserve Board while the litigation over Trump’s attempted removal of her continues. The 5-4 decision was that she should remain in office for the time being.

Why, then, is the document 83 pages long? The reason for the length is because it stands in direct conflict with the court’s opinion in Trump v. Slaughter (released on the same day!), which was that the president has pretty much unilateral authority to fire executive officials, even those in “independent” agencies like the FTC.

Roberts wrote the majority opinion, which starts with a history of America’s experience with central banks and government control of money, going all the way back to the collapse of the Continental currency during American Revolution. He traces through the lessons learned from the Bank of the United States and the Second Bank of the United States. Like me, you might be wondering why any of this would be relevant to the matter at hand: whether Lisa Cook should keep her job while her firing is litigated.

The reason is that Roberts is trying to make the Fed special. The majority needs a Fed exception to their Trump v. Slaughter decision. Roberts therefore portrays these earlier banks as institutional ancestors of the Federal Reserve, and then uses that alleged lineage to interpret the Federal Reserve Act.

The ambiguity is in this little sentence in the Act: “Each member shall hold office for a term of fourteen years from the expiration of the term of his predecessor, unless sooner removed for cause by the President.” What does “for cause” mean? How is it established? What does the process look like?

Roberts, arguing that Cook should keep her job during litigation, appeals to a wandering history of central banking in the U.S. to claim that the Fed’s independence is central to its purpose. The reason for the (bad) history lesson, then, is that the law never explicitly describes the Federal Reserve as “independent.” Roberts must stretch beyond the law to raise the bar for the president to be able to fire a Fed official.

So, we get eye rollers like this:

Without an independent central bank, there was no way to contain the damage whenever a major institution fell—no lender of last resort that could allow sound banks with good but temporarily illiquid assets to access cash, no elastic currency that could expand to meet demand, and no mechanism to ensure that small banks issued loans only within their means in the first place.

Without an independent central bank, there was no way to contain the damage whenever a major institution fell—no lender of last resort that could allow sound banks with good but temporarily illiquid assets to access cash, no........

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