What the Lisa Cook Decision Means for the Fed’s Independence

**SPEAKER_1** (0:00)
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**Alex Ossola** (0:19)
The Supreme Court says President Trump can't fire Fed Governor Lisa Cook, a crucial ruling for the central bank's independence.

**Nick Timiraos** (0:26)
Kevin Warsh is Trump's own pick. He became Fed Chair in May and this ruling actually helps him.

**Alex Ossola** (0:33)
But a separate Supreme Court decision expands presidential authority to fire officials at other government agencies. And Comcast is breaking up.

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Where we previously believed that scale and the diversification benefits warranted operating these businesses as one company, we've now simply changed our mind about that.

**Alex Ossola** (0:52)
It's Monday, June 29th. I'm Alex Ossola for the Wall Street Journal. This is the PM Edition of What's News, the top headlines and business stories that move the world today.
Today, the Supreme Court rejected President Trump's bid to fire Federal Reserve Governor Lisa Cook, at least for now. Trump has wanted to fire her as part of his mission to remake the Fed. Joining us now to discuss what the Court's decision means for the Central Bank's independence is WSJ Chief Economics Correspondent, Nick Timiraos. Nick, let's go back for a second and remind us why Trump wanted to fire Cook in the first place.

**Nick Timiraos** (1:33)
The stated reason was alleged mortgage fraud. A top housing official, Bill Poulty, claimed last summer that Cook had misrepresented which of two homes was her primary residence on mortgage paperwork. And so Trump moved to fire her last August, saying he had lost confidence in her integrity.
A lot of people saw this as a pretext.
Cook had never been charged with a crime. Trump had been frustrated that he couldn't get lower interest rates from the Fed. And so critics saw this less as a fraud case and more as a way to remove a governor who wasn't cooperating with what Trump wanted. And what we see today in this 5-4 decision authored by Chief Justice Roberts was a nod to Fed independence. He wrote that the due process here matters, that Cook never had a chance to explain what had happened. And so if the president can really just invent or cite any reason, if you try to get around this four cause standard with just any single thing you'll cite, you're turning these officials into people who serve at the president's will. And that is not the standard that we have for the Federal Reserve.

**Alex Ossola** (2:45)
We also have a new Fed chairman, Kevin Warsh. How does this decision affect how he does his job?

**Nick Timiraos** (2:51)
Kevin Warsh is Trump's own pick. He became Fed chair in May.
And this ruling actually helps him. It forecloses one of the most direct ways that a president could pressure a chair by packing the board with loyalists who would outvote him, by threatening the governors around him. So Warsh now has more room to operate independently.

**Alex Ossola** (3:14)
Right. And Lisa Cook, the plaintiff in this case, said in a statement that the decision was a vindication of Fed independence. But there was also a separate decision out today involving Rebecca Slaughter, a Democratic member of the Federal Trade Commission. Trump fired her last year, and the Supreme Court today gave the president free rein to fire officials at other independent agencies for any reason. So does this mean the Fed is different from other government agencies?

**Nick Timiraos** (3:38)
That's exactly what it means. The whole legal argument for Fed independence had always rested on this 90-year-old case, Humphrey's executor, that was essentially gutted in the Slaughter decision. I would say both of these rulings were what people had expected.
But it is showing that the bar for the Fed, the protection for the Fed, is greater now than for other independent regulatory bodies.

**Alex Ossola** (4:09)
You mentioned that this was a five-to-four decision from the Supreme Court. Chief Justice Roberts wrote the opinion with Sotomayor, Kagan, Kavanaugh, and Jackson concurring. Is that a surprising alliance of judges?

**Nick Timiraos** (4:20)
Well, yes. You do have appointees of Democratic and Republican presidents joining together in the majority. I think if there was any surprise here, it was actually that it was five-to-four and not six-to-three. There were some court watchers who thought that Justice Amy Coney Barrett might join with the majority on this.
And, you know, this issue is not fully resolved. This is being reported as a big win for the Fed. And that's true in a narrow sense. But the court today said, you know, Lisa Cook can stay on the board while she fights her case through the courts. And she will still have to do that.