With all the headlines centering around Greenland, it's easy to overlook this bit involving the US Supreme Court yesterday. The court justices were involved in hearing arguments over US president Trump's efforts to fire Fed governor Lisa Cook. And some of the comments made were worth taking note of.
To provide some backdrop, solicitor general John Sauer is the one tasked with arguing why Trump should be allowed to sack Cook. And the justices are the ones hearing that argument and rightfully question the intention and rightfulness of the matter.
Justice Brett Kavanaugh, appointed by Trump himself, offered some strong words in saying that:
"Your position that there's no judicial review, no process required, no remedy available, a very low bar for cause that the president alone determines - I mean, that would weaken, if not shatter, the independence of the Federal Reserve. We have to be aware of what we're doing and the consequences of your position for the structure of the government. Making the removal of a Fed governor too easy gives the president an incentive for a search-and-destroy mission to "find something and just put that on a piece of paper - no judicial review, no process, nothing. You're done."
Meanwhile, Justice Amy Coney Barrett (also appointed by Trump) engaged in a more heated debate with Sauer. She pointed out that economists had filed briefs with the court in saying that if Cook is fired, that could trigger a recession. However, Sauer rebutted in saying that the stock market has only continued to go up since the announcement of intention to fire Cook in August. Adding that it proves the supposed "doom and gloom" narrative is not factual.
Barrett then said:
"Well, I'll interrupt you there to say that I don't want to be in the business of predicting exactly what the market's going to do. I don't want to be responsible for quantifying that risk. I'm a judge, not an economist. But if there is a risk, doesn't that counsel ... caution on our part?"
That is some heavy pushback at this stage and arguably speaks to the intentions of the court in general, even if the justices were appointed by Trump.
As a reminder, the Supreme Court has ruled in favour of Trump on many cases over the past year - notably cases that need be decided on an emergency basis. In doing so, that allowed Trump to remove officials from federal agencies despite the legal challenges that come with the firing.
However, pushing to erode the Fed's independence? That seems to be one step too far perhaps.
The ruling on this matter is expected by the end of June but there is a chance that it could be announced sooner than that.
