Supreme Court conservatives have downplayed Trump’s conduct. The Fed case may change that

By Joan Biskupic, CNN Chief Supreme Court Analyst

(CNN) — The Supreme Court has gone along for years with President Donald Trump’s unconventional moves and brash legal arguments, as the conservative majority emphasized its regard for the presidency and appeared willing to accept the cost to its own reputation.

Not this time.

During Wednesday arguments over Trump’s attempt to remove Federal Reserve Governor Lisa Cook, the justices signaled this was no normal presidential action and that endorsing it would damage the central bank and their own standing.

The justices have tried to put the spotlight on the presidency and downplayed the conduct of Trump himself. But Trump’s methods were in plain sight Wednesday, especially as justices homed in on the fact that the purported firing began with a Truth Social post last August and that Cook had no opportunity to explain the situation.

On Wednesday, D. John Sauer, once Trump’s personal attorney and now the US solicitor general, met his strongest resistance to date. Sauer’s arguments unsettled, even antagonized, justices across the ideological spectrum.

Justice Amy Coney Barrett, one of the conservatives in the majority that usually sides with Trump, observed that economists had warned that allowing Trump to remove Cook from the historically independent Federal Reserve, “would trigger a recession.”

“I don’t want to be in a position of predicting exactly what the market’s going to do,” she told Sauer, who tried to minimize the concern. “But there’s a risk, General Sauer. I don’t want to be responsible for quantifying the risk. I’m a judge, not an economist.”

“If you look at what actually happened here,” Sauer told Barrett, “she was removed on August 25th and the stock market went up for the next three days. So we’ve already had a kind of natural experiment, so to speak, about whether or not the predictions of doom will really be implemented. Surely, that if investors are jittery or whatever the argument is, you would have seen that on August 25th, and you did not see that.”

Sauer’s winning streak

Trump and Sauer have enjoyed a remarkable winning streak – dating to 2024, when Sauer won him substantial immunity from criminal trial, just months before Trump was elected to his second term.

That case arose from Trump’s efforts to subvert the results of the 2020 election. But the ruling in Trump v. United States swept widely and provided a potent new defense for any president accused of wrongdoing. Trump has appeared to regard the decision, which enhanced the conception of the president’s “conclusive and preclusive” power, as a blank check.

Sauer has repeatedly invoked the case for muscular assertions of executive authority.

Last June, Sauer prevailed in the first major Supreme Court case of Trump’s second term, which tested judges’ authority to impose nationwide orders blocking arguably unconstitutional Trump policies as litigation plays out. That case, Trump v. Casa, centered on an executive order, signed on January 20, 2025, that would end birthright citizenship.

Trump is still defending that measure, which conflicts with the text of the 14th Amendment guarantee that children born in America become citizens irrespective of their parents’ status. The high court will consider constitutional arguments in the case this spring. On the first round of the controversy last year, Sauer persuaded the justices to limit nationwide injunctions against presidential orders.

As in the Trump immunity case, the vote was 6-3, with conservatives in the majority over the liberal dissenters.

In the months before the current conflict over the Federal Reserve, Sauer twice took the courtroom lectern to represent Trump in weighty questions related to the scope of presidential power.

Last month, the conservative majority appeared ready to side with Sauer’s assertion that the president may fire officials at the Federal Trade Commission and other independent agencies. At stake in that pending case is the fate of agencies set up to be shielded from presidential pressure in their missions to, for example, prevent fraudulent business practices or safeguard employee rights.

Sauer earlier in November defended Trump’s sweeping multibillion-dollar emergency tariffs. That case appeared close, and no decision has been announced. Trump has continued to widely deploy hefty import taxes on US trading partners and this week threatened to impose additional tariffs on European nations that opposed his effort to acquire Greenland.

Irrespective of how that tariff controversy ends, Trump has enjoyed so much success already that the administration set up a website touting its victories.

For its part, the court, controlled by six Republican appointees who favor robust executive power, has faced criticism for regularly aligning with the president. Trump has wielded massive power in his first year back, with firings, layoffs and the dismantling of federal agencies; the recission of appropriated funds at home and abroad; and an aggressive agenda of deportations and retribution toward perceived enemies.

Sauer’s hardline approach

As Sauer began his arguments in the well of the courtroom Wednesday, he took his usual unyielding approach: “Deceit or gross negligence by a financial regulator in financial transactions is cause for removal. In a two-week period in 2021, Lisa Cook submitted mortgage applications for two properties in Michigan and Georgia. In both, she told the lender that, within 60 days, she would occupy that property for one year as her principal residence. … Such behavior impugns Cook’s conduct, fitness, ability, or competence to serve as a governor of the Federal Reserve.”

Cook’s lawyers contend, however, that whatever inconsistency might have appeared in the materials, it was inadvertent. She has not been charged with any crime and has denied any wrongdoing. In any event, they said, the incident occurred before her 2022 appointment by President Joe Biden.

Justices questioned the nature of the allegation against Cook and whether she was given sufficient opportunity to respond to the president’s charge.

Referring to the “stack of papers you have to fill out when you’re buying real estate,” Chief Justice Roberts challenged Sauer, “So it doesn’t make a difference whether this was an inadvertent mistake or whether it was a devious way to get a better interest rate. It doesn’t matter for you, right?”

Sauer said the president has considerable discretion when removing board members “for cause,” such as negligence. He said judges should defer to a president’s determination that the conduct at issue relates to the individual’s competence or fitness.

Lower courts rejected the Trump position and have allowed Cook, still serving her 14-year term, to remain at her post as the litigation continues. The judge who preliminarily prevented Trump’s order from taking effect found the stated grounds lacking, noting that they referred only to allegations of conduct before Cook joined the Federal Reserve Board.

Fed’s independence at stake

The justices appeared receptive to claims from Cook’s lawyer, Paul Clement, that the administration’s removal was deeply flawed and would seriously threaten the Fed.

Left unsaid yet in the air, as Fed Governor Cook and Fed Chair Jerome Powell watched from spectator seats, was the incessant pressure Trump has been exerting on the Federal Reserve over interest rates.

The administration’s hostility toward Fed policy and its leaders continued this month as the Justice Department opened a criminal investigation of Powell tied to his testimony before Congress last June about the central bank’s $2.5 billion renovation of its headquarters in Washington.

Clement argued that Trump’s conception of “for cause” removal was excessively broad. He emphasized that the Federal Reserve was established in a way that would insulate it from such governmental pressure.

“There’s no rational reason to go through all the trouble of creating this unique quasi-private entity that is exempt from everything from the appropriations process to the civil service laws,” Clement said of the Fed, “just to give it a removal restriction that is as toothless as the president imagines.”

Justice Brett Kavanaugh, who’s been a consistent vote for the president’s initiatives, latched onto the administration’s lack of procedural safeguards and the consequences for the Federal Reserve’s mission.

“Your position that there’s no judicial review, no process required, no remedy available, very low bar for ‘cause’ – that the president alone determines – I mean that would weaken, if not shatter, the independence of the Federal Reserve.”

Kavanaugh speculated on the reverberations if Trump’s position prevailed: “It incentivizes a president to come up with what – as the Federal Reserve former governors say – trivial or inconsequential or old allegations that are very difficult to disprove. It incentivizes kind of the search and destroy and find something and just put that on a piece of paper, no judicial review, no process, nothing, you’re done.”

Throughout the argument, Sauer tried to keep the focus on the president’s prerogatives, declaring it “unprecedented” that lower courts had allowed Cook to stay on the job after Trump wanted her out.

Responding to that claim, Justice Sonia Sotomayer, the senior liberal, noted that never in the history of the Federal Reserve, created in 1913, had a president fired an officer.

“A hundred and twelve years, and it’s unprecedented that any Federal Reserve officer has ever been removed,” she said. “So the unprecedented nature of this case is … a part of what the president did, not what Ms. Cook did.”

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