The DOJ was amusingly feeble in the SC regarding the Fed’s Lisa Cook.
Oral Arguments
GEN. D. JOHN SAUER on behalf of Trump vs PAUL D. CLEMENT, ESQ. On behalf of Lisa Cook
GENERAL SAUER: Mr. Chief Justice, and may it please the Court: Deceit or gross negligence by a financial regulator in financial transactions is cause for removal. In a two-week period in 2021, Lisa Cook submitted mortgage applications for two properties in Michigan and Georgia. In both, she told the lender that, within 60 days, she would occupy that property for one year as her principal residence.
JUSTICE SOTOMAYOR: You ask us today in this emergency application to provide — to — to finally decide these issues. I want to know why. Meaning, the president, by your own admission, cannot fire someone for disagreeing with his policy choices. You’ve conceded that, correct?
GENERAL SAUER: Correct.JUSTICE SOTOMAYOR: All right. So it’s not as if keeping her is going to thwart any right he has to run the department because he has none. Now it’s not as if she’s been incompetent, negligent, or committed malfeasance while in office. This is something pre-office. So keeping her in office is not causing an immediate harm to to the agency. Why shouldn’t we wait until the end of this case, where all the issues are clear and where we make a final decision as to whether she should have been removed or not?
GENERAL SAUER: Let me start by addressing that last point. We are seeking a stay of an unprecedented preliminary injunction, restoring a principal officer of the United States after being removed by the President of the United States. JUSTICE SOTOMAYOR: A hundred and twelve years, and it’s unprecedented that any Federal Reserve officer has ever — has ever been removed. So the unprecedented nature of this case is a — is a part of what the president did, not what Ms. Cook did.|
GENERAL SAUER: What this Court held in Sawyer is there is no jurisdiction to issue a preliminary injunction restoring a public officer to office, and — and that’s a holding of the Court.
JUSTICE SOTOMAYOR: She never left. She never left. She’s still there.JUSTICE BARRETT: General Sauer, can I ask you a question that’s also related to the stay factors? Justice Sotomayor brought up the public interest here, and we have amicus briefs from economists who tell us that if Governor Cook is — if we grant you your stay, that it could trigger a recession. How should we think about the public interest in a case like this?
GENERAL SAUER: Surely, that if investors are jittery or whatever the argument is, you would have seen that on August 25th, and you did not see that. In fact, you have the surprised —
JUSTICE BARRETT: 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.
GENERAL SAUER: What the Court has to do is weigh — essentially, you have those amicus briefs as a reflection of very elite opinion, elite opinion that what’s happened here —
JUSTICE BARRETT: But there’s a risk, General Sauer.
GENERAL SAUER: Yes.
JUSTICE BARRETT: I don’t want to be responsible for quantifying that risk. I’m a judge, not an economist.JUSTICE JACKSON: General Sauer, excuse me, I — I guess I think you may have to be a little bit more specific with respect to the irreparable harm that you are alleging because, really, as Justice Barrett sort of indicated, we are in a stay posture here. So the question is, to what extent do we believe that the president or the public is harmed by allowing Ms. Cook to remain in her position for the pendency of this case?
GENERAL SAUER: Among other reasons, we assert grievous irreparable injury to the public perception to the Federal Reserve of allowing her to stay in office. They argue that this is going to cause the markets to tank.
JUSTICE JACKSON: You have evidence related —
GENERAL SAUER: When she was first removed, they [the market] didn’t tank ……JUSTICE JACKSON: You’re — you’re — you’re repeating —
GENERAL SAUER: — by seeing it so low —
CHIEF JUSTICE ROBERTS: Counsel —
JUSTICE JACKSON: — you’re repeating —
CHIEF JUSTICE ROBERTS: — please allow the Justice —
GENERAL SAUER: I’m sorry.
JUSTICE JACKSON: You’re repeating the allegation. What I’m asking you is the evidence that supports that allegation.
GENERAL SAUER: Well, the removal order addresses that because it — JUSTICE JACKSON: What is the removal order? The — the — the Truth Social post?JUSTICE JACKSON: Was Ms. Cook given the opportunity in some sort of formal proceeding to contest that evidence or explain it?
GENERAL SAUER: Not a formal proceeding. She was given an opportunity in public because she was notified —
JUSTICE JACKSON: Like, she was supposed to post about it and that was the
opportunity to be heard —
GENERAL SAUER: Yeah. […. …]
JUSTICE GORSUCH: So just — just — just a meeting across a conference table finished with “you’re fired”?JUSTICE KAGAN: Do — do I understand you, General, going back to Justice Gorsuch’s first question, to continue to maintain that, in fact, there is no requirement for notice and opportunity for a hearing? Is that right?
GENERAL SAUER: Absolutely, yes.
JUSTICE KAGAN: But the outcome of your position is that in this case, without — where you don’t have the inefficiency, neglect standard, the President need not provide any notice, the President need not provide any hearing; the President just really has to say, Ms. Cook, you’re fired?
GENERAL SAUER: He has to provide a cause. We contend that there has to be a cause, something that relates to conduct, fitness, sufficiency, or competence. We concede it cannot be for policy disagreement or — or for no reason at all or at will.
CHIEF JUSTICE ROBERTS: General Sauer, if — if you’re correct that courts do not have the authority to reinstate a removed officer, why are we wasting our time wondering if there’s cause or not? Because, even if we say, yes, there is cause, he shouldn’t have removed her, but we don’t have the authority to order her reinstatement, what’s the — how is that consistent with — with the time and energy being spent on determining if there’s cause?
GENERAL SAUER: We agree.
CHIEF JUSTICE ROBERTS: Well, it’s an independent basis. I guess it’s not independent in the sense that, if that’s right, the other one is irrelevant, right? It seems to me that if there is any level of cause, and you indicate that there is some level of cause, right, well, then you can’t be right about the idea that courts can’t order anybody who’s been removed to be reinstated.JUSTICE ALITO: Is there any reason why this whole matter had to be handled by everybody, by the executive branch, by the district court, by the D.C. Circuit, in such a hurried manner? We — you began by laying out what you claim to be the factual basis for the for-cause removal. But no court has ever explored those facts. Are the mortgage applications even in the record in this case?
GENERAL SAUER: I know that the text of the social media post that screenshots the mortgage applications is in the record. But I don’t recall if the — the paperwork itself is in the record, in the district court’s record.JUSTICE KAVANAUGH: For present purposes, you accept the constitutionality of the for-cause removal provision for the Federal Reserve, and that is what protects the independence of the Federal Reserve. What, in your view, is the purpose of that independence?
GENERAL SAUER: It protects the — exactly reflecting the plain text of the statute, it protects the governors for removal for policy disagreement or for no reason at all.
JUSTICE KAVANAUGH: And what is the broader purpose of that?
GENERAL SAUER: To preserve the independence of the Federal Reserve. JUSTICE KAVANAUGH: And what is the broader purpose of that?
GENERAL SAUER: Well, there is a number of reasons that are discussed by their amici and I think not disputed by us, which is that there is a — you know, a long tradition of having this exercise of monetary policy be exercised independent of, you know, executive — executive influence.
JUSTICE KAVANAUGH: And why is that independence important in your view? GENERAL SAUER: For — I — I don’t — we don’t dispute the importance of that for many of the reasons that their amici say, but we emphasize that there’s a balance struck here. This is not a ironclad “you can never be removed.” There is a cause removal authorized in –
JUSTICE KAVANAUGH: But, on 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 that we just discussed.
GENERAL SAUER: We disagree with that.
JUSTICE KAVANAUGH: Let’s talk about the real-world downstream effects of this because, if this were set as a precedent, it seems to me, just thinking big picture, what goes around comes around. All of the current president’s appointees would likely be removed for cause on January 20th, 2029, if there’s a Democratic President or January 20th, 2033, and then we’re really at at-will removal. So what are we doing here?
GENERAL SAUER: Yeah.
JUSTICE KAVANAUGH: What is — you know, we started — that’s why I started with what’s the purpose of the independence in the for-cause removal. If we accept all these no procedure, no judicial review, no remedy, you know, that’s what’s going to happen, I think, and then — then where are we? So do you dispute that that is, you know, the — the real-world effect?
GENERAL SAUER: I cannot predict what future presidents may or may not do, but the argument strikes me as a policy argument —
JUSTICE KAVANAUGH: Well, history is a pretty good guide. Once these tools are unleashed, they are used by both sides and usually more the second time around. We have to be aware of what we’re doing and the consequences of your
position for the structure of the government.JUSTICE BARRETT: I want to pick up on that question about why — Justice Kavanaugh said why are you afraid of a hearing or what would there be that would be wrong with process. I mean, you spent a lot of time litigating the case. You know, it’s gone up from the district court to the court of appeals, and now we’re here. And if there isn’t anything to fear from a hearing and if you have the evidence, why couldn’t those resources have been put into a hearing?
SCOTUS Blog Comments
I am pleased to report the SCOTUSblog view Supreme Court appears likely to prevent Trump from firing Fed governor
The Supreme Court on Wednesday appeared likely to leave Lisa Cook, a member of the Federal Reserve’s Board of Governors, on the job while her challenge to President Donald Trump’s attempt to fire her continues. Although the Trump administration contends that the president acted within the law, a majority of the justices seemed ready to reject the government’s request to allow him to remove her, even if it was not clear whether the justices would send the case back to the lower courts or instead go ahead and rule that Trump does not have a good reason to fire Cook.
DOJ’s Interaction with the Court
The Law Dork comments DOJ’s defense of Trump’s Fed firing effort falls flat at SCOTUS
President Donald Trump doesn’t like rules.
Announcing that “the Fed is different“ carve-out was all but a dare to a man like Trump, and, on August 25, he tried to fire Lisa Cook as a governor of the Federal Reserve Board, via a letter in a Truth social post.
It was “an extraordinary application” as Cook’s lawyer, Paul Clement, told the justices at one point of DOJ’s request.
With this president, many have been saying that a moment like this was inevitable. More than that, though, it was the combination of a president like Trump with this court’s recent executive authority expansion that brought us to Wednesday.
Despite that expansion, though, it was an extraordinarily difficult argument for Solicitor General John Sauer — due to the pushback and skepticism he faced from across the bench.
Sauer, Trump’s former personal lawyer, was aggressive in argument, combative in tone, and eager to repeatedly speak over justices (all women justices, by my count) trying to ask questions. After Sauer did this with both Justices Sonia Sotomayor and Amy Coney Barrett, this behavior eventually led Chief Justice John Roberts to step in and tell Sauer to let Justice Ketanji Brown Jackson speak.
“Counsel,” Roberts said, “please allow the Justice —” At which point Sauer said, “I’m sorry.”
It was an unusual moment for any advocate before the Supreme Court, but almost unheard of for the Chief Justice to have to step in and correct the behavior of a Justice Department lawyer — let alone the solicitor general.
On Wednesday, the court appeared to have reached a similar point with Trump as Roberts had reached Sauer: Trump’s behavior has led the court to step in.
Sauer’s failure to convince the justices of his and Trump’s position as to the president’s effort to fire Cook was clear throughout the arguments.
Unlike the other firing cases, the Trump administration is not in court challenging the for-cause removal requirement for Fed governors. Instead, they are arguing that Trump has cause to fire Cook based on allegations of mortgage fraud (that Cook’s lawyers have questioned). Those allegations, Trump wrote in his firing letter, amount to “deceitful and potentially criminal conduct” or, at least, “gross negligence in financial transactions.“
Sauer was attempting to argue three main points: (1) Cook has no right to a hearing to counter the allegations or standards applied; (2) courts have no authority to review Trump’s cause determination; and (3) courts can’t order reinstatement by way of a preliminary injunction and can’t issue final relief by way of mandamus against the president.
Justices across the board were skeptical of all three points, and, on top of that, questioned whether the Trump administration could show it would face irreparable harm necessary to get the “emergency” relief sought here, what the public interest is, or even why the case was being rushed forward in this way.
If a hearing is needed — an opportunity for Cook to respond to the allegations and cause claimed by Trump for her removal — Justice Neil Gorsuch asked about what sort of hearing would be needed. Kagan picked up on Sauer’s answer, asking, “Do I understand you, General … to continue to maintain that, in fact, there is no requirement for notice and opportunity for a hearing? Is that right?”
Sauer responded, “Absolutely. Yes.”
Gorsuch also questioned Sauer’s arguments against a remedy being available, asking, “[I]f you think mandamus doesn’t apply to the president at all, ever, how could you ever test the things you say can be tested?” — noting that Sauer had acknowledged, “[The president] has to remove for cause. He can’t remove for policy disagreements.”
Roberts had already challenged this even more bluntly: “It seems to me that if there is any level of cause, and you indicate that there is some level of cause, right, well then you can’t be right about the idea that courts can’t order anybody who’s been removed to be reinstated.”
When Sauer insisted that the law’s limits that he was arguing for — a “hard-fought compromise” he claimed — meant that this was a “removal standard that protects [Fed] governors from removal for a policy disagreement,” Jackson pushed back.
“But it only protects them insofar as the president’s determination about cause is reviewable and based on actual evidence that has been established,” she told him. “It doesn’t protect them if the president can just make it up.“
Throughout it all, an exchange with Justice Brett Kavanaugh was perhaps the most striking sign of where things stood on Wednesday. The best Sauer could muster to that was, “We disagree with that.“
In a sign of how far the argument had gotten away from Sauer, most of Clement’s time at the podium was spent in friendly debate with the justices over the contours of how the case should proceed, backup arguments, and — in one instance — “the backup to the backup” argument.
The former solicitor general in the George W. Bush administration, Clement was regularly engaged in joking laughter with the justices.
There was no laughter during Sauer’s argument.
Conclusion
The oral arguments were 151 pages. I read all of Sauer’s discussion with the court (over half) and skimmed much of the rest.
This literally may be one of the stupidest cases ever argued before the Supreme Court.
When Kavanaugh is forcefully challenging Trump’s case, you know it’s over.
Thomas and Alito may find a way to side with Trump, but this appears to be no worse that 7-2 against Trump.
Sauer truly looked like an idiot.
Trump’s past mortgages mirror those now labeled as ‘fraud’
And the irony of it all is Trump’s past mortgages mirror those now labeled as ‘fraud’
A report published this week by ProPublica indicates that in late 1993 and early 1994, Trump — then a New York resident — signed two mortgages for neighboring homes in Palm Beach, Florida, each time affirming that the property would serve as his principal residence.
Records and recent interviews indicate he never lived in either house. Instead, both homes, situated just north of Mar-a-Lago, were reportedly treated as rental investments, mirroring the conduct his administration now claims is fraudulent.
“They were rentals from the beginning,” Shirley Wyner, who with her late husband served as Trump’s local real estate team and later handled leasing for the homes, told ProPublica. “President Trump never lived there.”
The mortgages, issued by Merrill Lynch for $525,000 and $1.2 million, required Trump to occupy each home as his principal residence within 60 days and to remain for at least one year unless the lender gave approval.
“If somebody is claiming two primary residences, that is not appropriate, and we will refer it for criminal investigation,” Bill Pulte, director of the Federal Housing Finance Agency, has previously stated.
Trump has moved to oust Federal Reserve Governor Lisa Cook, citing her two primary-residence mortgages.
“It is inconceivable that you were not aware of your first commitment when making the second,” the president wrote in a letter accusing Cook of “gross negligence.”
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