Presidential power expanded as Supreme Court allows agency head firings, except at the Federal Reserve

The Supreme Court widened a US president’s authority to dismiss leaders of independent federal agencies. The court upheld President Donald Trump’s removals in most cases. An exception applied to the Federal Reserve, due to its role in interest rates. The ruling weakened federal laws that require a reason for firing agency heads.

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The court also let Fed Governor Lisa Cook keep working while a legal fight continues. Cook is challenging Trump’s effort to remove Cook over mortgage fraud claims. Cook has denied wrongdoing and has not been charged. The justices decided Cook could stay for now. The case is being watched for possible market effects.

Supreme Court ruling on presidential power and independent agencies

The nine-member court, led by six conservative justices, set aside the 91-year-old Humphreys Executor decision. That earlier ruling limited when presidents could remove agency board members. Chief Justice John Roberts wrote, "We hold that such protection from removal is contrary to the separation of powers enshrined in the Constitution,\". The ruling reduced protections meant to limit political pressure.

The decision came from the case of former Federal Trade Commission member Rebecca Slaughter. Trump fired Slaughter without cause, despite a federal law requiring a reason. The court’s logic also applies to the National Labour Relations Board and other bodies. It also covers the Merit Systems Protection Board and the Consumer Product Safety Commission.

The court had signalled support for Trump’s view earlier, over liberal objections. It allowed Slaughter and other removed board members to lose their jobs during ongoing challenges. No earlier president had tried to gain direct control over many regulators. These agencies oversee areas like nuclear energy, labour relations, and product safety.

At arguments in December, conservative justices focused on long-term constitutional impact. Some comments echoed the 2024 presidential immunity case. Justice Neil Gorsuch said then, \"The court is writing a decision for the ages,\". Trump later praised the new ruling online. Trump wrote, \"It is such an Honor to be the sitting President who won this Historic and Unprecedented Ruling, one of the most important ever given with respect to Presidential Powers,\".

Justice Sonia Sotomayor warned the ruling could have serious effects. Sotomayor said it could lead to submission, instability, and even oppression. Sotomayor also said, \"The president, to be sure, emerges with more power than ever before. That power was given to him by six justices on this court, not the people or the Constitution,\". The dissent argued the court shifted power away from Congress.

Federal Reserve exception in Supreme Court ruling and Lisa Cook case

In Cook’s dispute, the court voted 5-4 to block her immediate removal. Roberts, Justice Brett Kavanaugh, and three liberal justices formed that majority. Roberts said removing Cook now could allow a president to remove a Fed member anytime. Roberts wrote, \"That would turn for-cause protection into little more than at-will employment.\"

Roberts added a footnote offering a path for another attempt. The opinion said nothing stops Trump from trying again. Cook would need notice and a chance to contest removal. Trump indicated interest in that option on Truth Social. Trump wrote, \"we will take appropriate action immediately to make sure that someone who has committed wrongdoing will not be making vital decisions concerning the Welfare of the United States of America!\"

Cook was nominated to the Fed’s Board of Governors by Biden. The court said Cook can keep the post while the lawsuit proceeds. The Trump administration is appealing a lower-court decision backing Cook. Lower court judges had already allowed Cook to remain as one of seven Fed governors.

Trump also clashed with former Fed chairman Jerome Powell. Trump warned Powell could be removed if Powell stayed on the board. Powell stayed as a governor after the chair term ended in mid-May. Kevin Warsh replaced Powell as chairman. This leadership change came as the wider dispute drew investor attention.

Federal Reserve interest rates, Trump pressure, and mortgage fraud claims

Critics said Trump’s move aims to shape US interest rate policy. If Cook is removed, Trump could name a replacement. That could give Trump a majority on the Fed board. Cook is the first Black woman to serve as a Federal Reserve governor. Wall Street investors are tracking the case for risks to markets.

Cook said the dispute was not about older mortgage paperwork. Cook said, \"Cook said her case was never about mortgage documents signed years before I became a Federal Reserve governor.\" Cook also said, \"It was an attempt to remove me on a manufactured pretext because I refused to bow to political pressure and continued to set interest rates based only on what would best serve the American people. That is the most fundamental obligation of a Federal Reserve governor,\".

Trump has played down concerns that fast rate cuts could raise inflation. Trump wants major reductions to lower government borrowing costs. Trump also wants cheaper loans for homes and cars. The Fed has kept its key rate unchanged this year. Some policymakers still warn inflation remains high.

During the court review, Trump intensified pressure on the central bank. The Justice Department opened a criminal investigation of Powell. The department also issued subpoenas to the Fed. The department said the inquiry ended in late April. That announcement removed a hurdle to Warsh’s confirmation as Powell’s successor.

The case against Cook centres on allegations from mid-2021. Investigators looked at property claims in Michigan and Georgia in June and July 2021. Such filings can lower mortgage rates and reduce down payments. Solicitor General D. John Sauer said in January the filings showed serious negligence. Cook denied wrongdoing and has not faced criminal charges.

The ruling leaves most agency leaders with fewer job protections against presidential removal. At the same time, the Supreme Court kept the Federal Reserve carve-out in place for now. Cook will remain a governor while the appeal proceeds. The outcome keeps attention on the Fed’s independence and the legal limits on executive control.

With inputs from PTI