Two major decisions from the Supreme Court on Monday wrestled with the question of when the president can fire an independent agency leader but reached starkly different conclusions.
The facts were similar: Both Federal Reserve Board governor Lisa Cook and Federal Trade Commissioner Rebecca Slaughter were fired by President Trump “for cause,” and both filed suit to keep their jobs. Trump even fired Slaughter but “did not identify a cause under the statute,” Monday’s decision notes.
Yet Cook’s firing was rejected while Slaughter’s dismissal was upheld in separate decisions authored by Chief Justice John Roberts, who drew a line between the central bank and other federal agencies based on “the Federal Reserve’s unique historical status and role.”
The immediate effect is that Trump now enjoys sweeping new powers to fire government employees in what are traditionally classified as independent agencies — except for the central bank’s leaders, where the president must continue to consult the courts.
The 5-4 decision in the Federal Reserve case saw Roberts joined by three liberal justices and Trump appointee Brett Kavanaugh, keeping Cook in her position for now. In the Federal Trade Commission decision, all the conservative justices joined together to form a 6-3 majority.
Trump immediately called the Slaughter decision a “big win” on social media and in a second post said it was “greatly increasing Presidential Power at a time when it is most needed!”
He downplayed the Cook decision as “procedural” and promised to “take appropriate action immediately” to remove her from the board.
Read more: How much control does the president have over the Fed and interest rates?
Why the Fed is seen as different
But even with Trump’s new authorities over much of the federal government, the Cook decision clearly shows that the court views the Federal Reserve differently.
Roberts wrote that accepting Trump’s effort to fire Cook without evidence to back up his claims of mortgage fraud would “transform the Federal Reserve’s for-cause protection into at-will employment — an interpretive leap out of step with the statute Congress enacted and our Nation’s tradition of central banking protected from political interference.”
Both the fact and appearance of independence “is key to the Federal Reserve’s design,” he added.
But in the FTC case, Roberts wrote, these employees are “subject to the President’s superintendence” and concluded that “the FTC’s for-cause removal provision violates the separation of powers.”
The FTC decision ends a 90-year-old precedent called Humphrey’s Executor, which was based on a 1935 Supreme Court decision finding that Congress may limit the power of the president to fire certain government officials
The “framework has not withstood the test of time,” Roberts wrote, concluding that “if anything more is left of Humphrey’s, the Court overrules it.”
The removal of the precedent strips away protections for a range of “independent” government agencies, giving the president the power to fire leaders at agencies such as the Consumer Product Safety Commission, the Equal Employment Opportunity Commission, the National Labor Relations Board, and the US Postal Service without providing a reason.
Democrats immediately slammed the decision. Sen. Dick Durbin of Illinois, the ranking member of the Senate’s Judiciary Committee, called the ruling “an affront to good governance and the point of ‘independent’ federal agencies in the first place.”
What happens to Cook now
Monday’s decision means Cook can remain in her role while her lawsuit over her firing plays out in lower courts. Trump fired her last August over alleged mortgage fraud, saying she lied on a mortgage application to obtain better loan terms.
Cook said in a statement that “this was never about mortgage documents signed years before I became a Federal Reserve governor. It was an attempt to remove me on a manufactured pretext because I refused to bow to political pressure.”
Monday’s decision did not bar Trump from firing Cook but said she is entitled to respond to the allegations, and the firing is subject to the court’s review.
“The Federal Reserve operates at a deliberate remove from the ordinary political process,” Roberts wrote.
Ben Werschkul is a Washington correspondent for Yahoo Finance.
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