Takeaways: Supreme Court signals it will defy Trump to keep Lisa Cook on Federal Reserve

By John Fritze, Devan Cole, Bryan Mena, Tierney Sneed, CNN

(CNN) — The Supreme Court signaled deep skepticism Wednesday that President Donald Trump had the authority to remove Lisa Cook from the Federal Reserve, with several conservative justices joining their liberal colleagues in posing pointed questions of the lawyer defending the president.

By the end of the two-hour argument, many of the justices appeared to be more interested in how the court would side with Cook — not whether it would do so — and how quickly it would resolve her underlying litigation.

The case is among the most pressing to deal with presidential power and the economy that the Supreme Court has heard in years. Cook argued that a ruling for Trump would sow “chaos” in the markets and eviscerate the central bank’s longstanding independence from White House politics. The administration focused on more technical arguments that found little purchase, even on a 6-3 conservative court that has repeatedly sided with Trump.

Here are the key takeaways from oral arguments:

Conservatives rush to question Trump

Justice Brett Kavanaugh, who was Trump’s second nominee to the high court, made clear in a series of early questions that he had deep reservations with the administration’s position — specifically the idea that it could define the “cause” for firing Cook and evade review from courts.

Trump fired Cook last summer based on allegations that she had committed mortgage fraud by claiming two properties as her principal residence. Cook has denied any wrongdoing and has said that other documents demonstrate that she was clear one of the properties was a vacation home.

“What goes around comes around,” Kavanaugh warned US Solicitor General D. John Sauer, raising the possibility that the next president could cite some questionable “cause” to fire Trump’s appointees to the Fed based on “trivial or inconsequential or old allegations that are very difficult to disprove.”

“Once these tools are unleashed,” Kavanaugh said, “they’re used by both sides.”

Chief Justice John Roberts jumped in early when Sauer claimed that Cook’s applications were “at least gross negligence” and “quite a big mistake.”

“Well, I mean, I suppose we can debate that, how significant it is in a stack of papers you have to fill out when you’re buying real estate,” Roberts said.

Even Justice Samuel Alito, a conservative who also appeared to have concerns with lower court rulings that sided with Cook, at one point expressed annoyance that the case was being rushed through the courts and said that Trump’s move was “handled in a very cursory manner.”

Cook faces a friendlier bench

The questions for Paul Clement, the attorney arguing for Cook, signaled that the justices had likely decided that they were not inclined to give Trump the immediate okay to fire Cook, but were grappling with what should happen in the case next.

A narrow ruling simply concluding that Trump had not met the threshold for an emergency intervention would all but guarantee that the case would be back before the justices within a year or two. Yet it would also mean that Cook would remain in the job in the meantime.

A ruling agreeing with the DC Circuit that Trump had likely violated Cook’s due process rights by not giving her sufficient opportunity to respond to the allegations would be the “simplest” way to resolve the current dispute, Kavanaugh said.

But other justices noted that a ruling that said that Trump was required to give Cook an opportunity to respond to the mortgage claims wouldn’t answer the underlying questions over whether that alleged conduct meets the “for cause” threshold that allows Trump to fire her.

“I guess I don’t quite understand what sending it back would be for, other than airing of the same sort of issues that we’ve been airing this morning,” Roberts said.

Part of the debate centered on technical questions about the judicial mechanisms that courts would be allowed to use if they decided Cook should prevail in the lawsuit. There are legal limits constraining what types of orders courts can issue directly against presidents, but Clement noted that courts have been creative in finding ways to issue orders against lower-level officials to effectuate their rulings.

Justice Ketanji Brown Jackson, a member of the court’s liberal wing, suggested that the debate over that mechanism was premature.

“No one has made a definitive determination about the president’s right to remove her. The question now is, just in the interim, while that issue is being litigated, what happens?” Jackson said.

Still, in a sign that Clement sensed a win for his client, the veteran Supreme Court lawyer emphasized the benefits of the court issuing the opinion that would address the broader range of legal questions that had been put forward in the arguments.

“If you decided to go a little further and say something substantive, it might bring all of this to an end,” Clement said. “And there’s probably some virtue to that.”

Little traction for Trump’s sweepiest arguments

Trump’s lawyers have repeatedly argued that courts have no business scrutinizing some of his most controversial moves, including his desire to send National Guard troops to major cities and his effort to use a sweeping wartime authority to quickly deport migrants.

Too much court intervention, the Department of Justice has said, would trample on the executive’s power to govern as they see fit.

But the justices seemed to have little appetite for that position in Cook’s case.

Several members of the court made clear that they were not willing to adopt Sauer’s argument that the judiciary had no role to play in the dispute – specifically, in reviewing the amount of process given to Cook or another governor before their attempted removal.

“Your position that there’s no judicial review, no process required, no remedy available, very low bar for ‘cause’ – that the president alone determines – I mean that would weaken, if not shatter, the independence of the Federal Reserve,” Kavanaugh told Sauer.

Roberts, too, repeatedly put Sauer on the defense about his position, peppering him with questions about when, if at all, a court could step into a contested firing like Cook’s.

“I suppose we can debate real estate, but I gather under your position it doesn’t make a difference, right? In other words, the determination of cause is unreviewable, right?” Roberts asked Sauer.

The solicitor general contended that the only place for judicial review is if Trump gave no reason at all for his decision to fire Cook.

“But once you’re within that, and we clearly are here, then there would be deference to the president,” he told the chief justice.

Roberts also questioned the administration’s position that courts are powerless to reinstate an official who might be wrongly fired by the president.

“If you’re correct that courts do not have authority to reinstate a removed officer, why are we wasting our time wondering if there’s cause or not?” Roberts asked. “How is that consistent with the time and energy being spent on determining if there’s cause?”

If there is any level of cause that a president has to show to fire Cook, Roberts said, “and you indicate that there is some level of cause — well, then you can’t be right about the idea that a court can’t order anybody who’s been removed to be reinstated.”

Powell, Cook make rare appearance

Adding to the drama of the Supreme Court’s argument was the fact that Cook, Federal Reserve Chair Jerome Powell and former Fed Chair Ben Bernanke sat in the audience, a striking show of support for the institution’s ability to set interest rates free of politics.

Powell’s attendance made a big statement. Earlier this month, it was revealed that federal prosecutors are probing Powell’s testimony to Congress last year on the Fed’s renovation of its Washington, DC headquarters. Powell released a stunning video calling out Trump, a critic of Powell’s actions on interest rates, for relentlessly trying to bend the Fed to his will.

Powell’s video — and his presence at the Supreme Court — is an extraordinary departure from his usual way of handling Trump’s attacks, which had been to simply avoid further escalation. For years, since Trump’s first term, Powell had mostly avoided responding directly to the president’s public gripes that the Fed should be lowering interest rates.

Powell will likely be asked to elaborate when he addresses reporters next week in a news conference after Fed policymakers announce their latest decision on interest rates.

Several of Powell’s former and current colleagues have come out in support of his response to the administration’s intense pressure campaign, including New York Fed President John Williams, a highly influential member of the Fed’s rate-setting committee.

While Cook did not speak in the courtroom or after the arguments, she did say in a statement that the verdict will decide “whether the Federal Reserve will set key interest rates guided by evidence and independent judgment or will succumb to political pressure.” Also in attendance at Wednesday’s hearing were Fed Governor Michael Barr, Powell’s wife and several members of Cook’s family.

It was a lively and full courtroom during oral arguments, with several moments of murmur and soft laughter, including at the justices’ multiple references to Trump’s Truth Social post notifying Cook of her termination.

When will the court rule on this and tariffs?

Given the tenor of the arguments, and the fact that the case was at the Supreme Court on an emergency basis, it’s possible that the justices will hand down a decision far more quickly than it normally might in an argued case. Usually, the court will resolve its most important cases before the end of June.

Trump v. Cook is the only case on the Supreme Court’s argument calendar this year on its emergency docket. That unusual posture means there’s no specific “question presented,” as there would be if the merits of the case had been appealed from a lower court. The “question presented” helps to focus an argument and, ultimately, a decision. In this case, Cook has defined the question very broadly as one of Fed independence. Trump, by contrast, has defined the case narrowly.

But the possibility of a faster resolution means that court watchers, the White House and the markets will now be waiting expectantly for two major pending opinions involving the Trump administration: The Cook case and the appeal challenging the president’s sweeping use of emergency tariffs. Trump also faced a rocky argument in the tariffs case in early November.

Of course, the Supreme Court’s view of “fast” is different than how the rest of Washington would define that word. The court is not scheduled to take the bench again until mid-February — though it could add a day to release opinions at any time.

CNN’s Elisabeth Buchwald and Austin Culpepper contributed to this report.

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