President Trump's power over the Federal Reserve goes before the Supreme Court Wednesday in a blockbuster review of the central bank governors' firing protections.
As the president wages war against the Fed for not lowering interest rates quicker, Trump has looked to sack Fed governor Lisa Cook by accusing her of mortgage fraud, which she denies.
Lower courts sided with Cook. The justices have punted a decision for months on Trump's emergency appeal until they hold oral arguments, which are set to kick off at 10 a.m. EST.
Here's what to watch for as the argument gets underway:
How the justices interpret 'for cause'
The Federal Reserve Act of 1913 only permits the president to remove Fed governors "for cause."
The statute does not explicitly define "cause." Wednesday's case turns on how the justices interpret it.
Everyone concedes that disagreeing with a governor's votes on interest rates isn't sufficient. Beyond that, the sides diverge.
The Trump administration contends that "for cause" gives the president broad discretion to fire Fed governors for reasons related to their conduct, ability, fitness or competence.
If the justices agree, the administration says it's an easy case and that the mortgage fraud accusations against Cook easily pass the test.
Cook's lawyers push back. They say Congress intended "for cause" to be comparable to the standard in place at a handful of other independent agencies, which spell out inefficiency, neglect or malfeasance as the three preconditions to firing.
Watch to see if the justices agree with the Trump administration's proposal, or if they agree with the concerns of Cook that it would imperil the Fed's independence.
Does Cook's due process argument gain steam
Regardless of whether Trump had valid "cause," Cook will advance several other arguments Wednesday.
She asserts that due process protections under the Constitution and federal law guaranteed her a hearing to deny the mortgage fraud accusations.
"She unequivocally does, and she is prepared to refute the allegations in an appropriate forum," Cook's lawyers wrote.
The Trump administration says no such hearing is legally required and that Cook has not explained what it would look like or how it would make any difference.
Additionally, the administration will try to convince the justices that even if she was wrongfully removed, the lower courts had no power to grant an injunction reinstating Cook as the litigation plays out.
If the justices tip their hand on FTC decision
The case comes to the court weeks after the justices heard arguments on Trump's power to fire Rebecca Slaughter, a member of the Federal Trade Commission (FTC).
The cases both involve the bounds of Trump's presidential power, but they raise distinct issues.
At the Fed, Trump purports to have valid cause in sacking Cook.
But at the FTC, the president does not. Instead, he argues Slaughter's firing protections infringe on the separation of powers — a broad assertion of presidential power that appears to have drawn sympathy with the Supreme Court's conservative majority.
The Trump administration has not made that argument for the Fed, which the justices have signaled has special status that may justify its protections.
Under the court's typical procedures, the justices would've taken an initial vote on Slaughter's case in the days following the December argument. The opinion would've been assigned, and drafting would commence.
Watch on Wednesday to see if the justices' comments tip their hand on what they plan to do in Slaughter's case.
How Powell's attendance impacts the case
Wednesday's argument only directly concerns Cook's firing, but watch to see if the justices connect it to Trump's broader threats against the central bank for not lowering interest rates quicker.
Fed Chair Jerome Powell will attend Wednesday's argument at the Supreme Court, a source familiar with his plans tells our colleague Sylvan Lane, The Hill's business editor.
For months, Trump has mused about firing Powell. But the president has yet to do so as the clock ticks closer to May, when Powell's term as chair ends (he may remain on the board until 2028).
In the lead-up to Wednesday's argument, things took a turn. The Justice Department issued a subpoena to the Fed, bringing its criminal investigation into Powell to light.
The investigation centers on congressional testimony Powell gave concerning the Fed's multi-billion-dollar renovation of its headquarters, which has faced significant cost overruns. Powell denies wrongdoing and has cast the investigation as an attempt to influence the central bank's monetary policy.
As the Fed's chair, Powell is formally named as a defendant in Cook's lawsuit.
His attendance makes him the elephant in the room. Government officials typically sit near the front of the public gallery, which is in the back half of the courtroom behind the bar section.
We'll be in the room Wednesday to watch the justices — and Powell. So stay tuned.
Welcome to The Gavel, The Hill's weekly courts newsletter from Ella Lee and Zach Schonfeld. Reach out to us on X (@ByEllaLee, @ZachASchonfeld) or Signal (elee.03, zachschonfeld.48). Sign up here or in the box below:
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