A pivotal U.S. Supreme Court justice has signaled his intent to safeguard the Federal Reserve's independence, as the conservative-majority court weighs whether to grant President Donald Trump the authority to dismiss members of independent agencies like the Federal Trade Commission (FTC).
During Monday's oral arguments, Justice Brett Kavanaugh repeatedly questioned the government's lead counsel, Deputy Solicitor General John Sauer, about implications for the Fed. He pressed Sauer to address critics' warnings that a broad interpretation of presidential removal power in the FTC case could ultimately undermine the Fed's autonomy.
"I share those concerns," said Kavanaugh, a Trump appointee.
The court’s 6-3 conservative bloc appeared likely to side with the administration in overturning a 90-year precedent that could allow Trump to fire leaders of dozens of traditionally independent agencies. However, multiple justices indicated significant resistance to extending such power to the Fed without cause.
While the Court won’t hear a separate case challenging Trump’s attempted removal of Fed Governor Lisa Cook until January 21, the Fed’s future relationship with the White House loomed over Monday’s hearing.
Sauer acknowledged prior rulings recognizing the Fed’s unique status regarding presidential removal but argued Congress—not courts—should determine any protections. He maintained the Justice Department isn’t directly challenging the Fed’s statutory "for-cause" removal safeguards but insists judges can’t dictate how presidents exercise dismissal authority.
Liberal justices pressed Sauer on how exceptions would apply given the administration’s sweeping claim that Congress cannot limit presidential control over executive officers. Kavanaugh expressed "deep skepticism" toward the government’s stance that courts lack power to reinstate wrongfully fired officials, calling this a potential "workaround" for exceptions like those protecting Fed officials and specialized tax courts.
Sauer countered that precedent holds the harm of forcing reinstatement outweighs an individual officer’s rights.
**Institutional Exceptions** Though the Court has largely backed Trump in removal disputes this year, it affirmed in May that the Fed occupies a "unique position" in government—an "unusual quasi-private entity" with historical ties to early U.S. banks.
In October, the Court blocked Trump’s bid to immediately remove Cook over unproven mortgage fraud allegations (which she denies), contrasting with rulings letting other Trump firings take effect during litigation.
Former Fed officials warn easier presidential removals could destabilize the U.S. economy by politicizing interest-rate decisions meant to remain insulated from short-term pressures.
In the FTC case, the DOJ argued the Court needn’t address the Fed’s status, calling any protections "agency-specific exceptions." Lawyers for the fired FTC member countered that if the Fed is a historical exception, others like the FTC could qualify too.
The hearing preceded the Fed’s final 2023 policy meeting, where officials are expected to deliver a third consecutive rate cut amid Trump’s relentless pressure for deeper easing and public criticism of Chair Jerome Powell. Trump has openly sought a majority of Fed board appointees—a scenario closer should Cook’s removal succeed.
Powell has repeatedly stressed Fed independence this year, insisting policy remains nonpartisan. The Fed says it will respect any judicial ruling on Cook’s case.
Cook has attended all policy meetings in 2023, including two post-removal attempts where she voted for rate cuts. Last month, she gave her first public remarks since the dismissal effort, addressing economic outlook and financial stability.
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