Federal Reserve Board Chair Jerome PowellDaniel Torok/White House/Zuma

On Wednesday, the Supreme Court sat for oral arguments over whether the all-powerful president the justices have created in recent years can control the Federal Reserve. The end of Federal Reserve independence would reset the global financial order, tank retirement accounts, and give the White House vast new powers. After a two-hour hearing, the answer seems to be that the court will craft some carveout to protect Fed independence, but how robust and meaningful it will be remains to be seen. 

The problem the court faces is its creation of an all-powerful president who can remove independent commissioners, like Fed governors, at will.

The case, Trump v. Cook, comes from President Donald Trump’s attempt to fire Fed governor Lisa Cook. Federal Reserve governors serve fixed 14-year terms and can only be removed by the president for cause. Trump’s attempted removal came amid his push to coerce the financial regulator into lowering interest rates, but the purported cause is mortgage fraud; in reality, Cook’s supposed misdeed looks like a clerical error at worst. Cook sued and a district court judge ordered that she remain in her job as her case plays out. The question before the justices was whether to let the ruling keeping her at work stand. This led to follow-on questions including: Does she need proper notice and a hearing to be fired? What does that look like? Can the courts even decide if there was sufficient cause? And if they can, can a judge order the president not to fire her?

But all these questions really boil down to just one: Will there be meaningful independence for the Fed? If a president can send a lackey to dig up dirt on a Fed governor and claim it shows sufficient cause, and the courts have no way to intervene, then Trump controls the Fed. That is an outcome that economists, most politicians, the rest of the world, and the justices don’t want.

The problem the Republican wing of the court faces is that it has spent the past several years creating the legal basis for an all-powerful president who can indeed remove independent agency commissioners, like Federal Reserve Board Governors, at will. In case after case, they have decreed that the president must control the entire executive branch, which must operate as an extension of his will. The Republican appointees have let Trump get away with illegal firings at other agencies on the theory that the president suffers an irreparable harm when he is blocked from wielding executive power as he sees fit. Beyond that, the court is currently deliberating a case, Trump v. Slaughter, over whether independent agencies are even constitutional—and the GOP appointees seem ready to rule them out, overturning a 90-year old precedent, Humphrey’s Executor, that blessed independent agencies, including the Fed. 

The Roberts court’s destruction of independent agencies, which are led by bipartisan commissions........

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