Will Trump’s Firing of Lisa Cook End Quickly?

 The topic of discussion for this Constitution Monday is the power of the President of the United States to fire appointed members of the Executive Branch. This includes the power to fire members of the Federal Reserve’s Board of Governors (Fed) for “cause.”

Recently, William Pulte, director of the Federal Housing Finance Agency referred Lisa Cook, a member of the Federal Reserve’s Board of Governors, to the Department of Justice for allegedly committing mortgage fraud “by lying about her principal place of residence for purposes of securing more favorable interest rates – and then failed to report her rental income from the properties, to boot.”

Since Cook was hired to enforce mortgage laws and prevent mortgage fraud, President Donald Trump suggested that Cook should resign from the Fed and threatened to fire her if she did not resign. She did not resign, and Trump fired her – the first POTUS to ever try to “fire a fed governor for cause.”

Trump’s detractors immediate criticized him for violating “institutional norms,” but Josh Hammer claims that Trump “acted appropriately” and “fully within his constitutional and statutorily delegated authority … -- whether for ‘cause’ or not.” He suggests that we “return to first principles.” 

The modern administrative state operates as a fourth branch of government, unmoored from direct political accountability….

Article II of the Constitution vests the entirety of the “executive power” in the hands of the president of the United States….

… Members of the Fed’s board of governors are appointed by the president and confirmed by the Senate. They exercise significant policymaking authority, affecting the economy, interest rates and the value of the dollar. That is executive power under any reasonable understanding of the term.

Even more to the point, if the Fed is not part of the executive branch such that the president is able to wield plenary removal power, then where exactly is it? Surely, the Fed is not part of Congress or the judiciary….

Ultimately, Trump must be able to fire members of the Fed’s board of the governors – or else the Fed is structured in an unconstitutional manner. There is no tenable middle ground here.

What about the relevant authorizing statute? The Federal Reserve Act of 1913, which brought the Fed into existence, sets staggered 14-year terms for governors and doesn’t expressly provide for at-will removal. But it also doesn’t specify what constitutes a legitimate “cause” for a governor’s removal. Congress could have specified that “cause” requires, as Cook’s counsel Abbe Lowell now argues, a Fed governor to first be indicted or convicted of a crime. But Congress didn’t specify that.

“Cause” absent such specification is an inherently subjective criterion. And what could be more legitimate of a cause for removing a governor of the nation’s central bank – which is, among other things, the lender of last resort to the country’s financial institutions – than the alleged defrauding of financial institutions? The allegations raise serious concerns about the legitimacy of the Fed. It is in the national interest to preserve that legitimacy.

Let’s also not forget: Term length does not equal tenure protection. Saying governors serve “for 14 years” is not the same as saying they cannot be removed within that time period. Courts have made this distinction plenty of times before – consider, for instance, the (legitimate) 2017 dismissal of James Comey, who was less than four years into what was to have been a 10-year tenure as FBI director.

The lawsuits will come anyway. So be it. Those fights are worth having. Trump’s first term was plagued by internal sabotage from bureaucrats and agency officers who fancied themselves a coequal branch of government. It is imperative that Trump’s second term not repeat that tragic mistake. And the first for-cause removal of a sitting Fed governor sends an unmistakable message: The American people, through their elected president, will once again take the reins of government.