In this episode of Unwritten Law, Mark Chenoweth and John Vecchione welcome NCLA’s new Senior Litigation Counsel, Jacob Huebert, to unpack Trump v. Cook — a landmark Supreme Court case testing whether the president can fire a Federal Reserve governor at will. They dive into the constitutional roots of Article II, what it means for presidential authority, and why the Fed’s independence might not be as untouchable as some believe.

Mark Chenoweth: If you think that unwritten law doesn’t affect you, think again. Whether you’re a business owner, a professional, just an average citizen; you are unknowingly going to fall under vague and unofficial rules. And while bureaucrats act like lawmakers, they’re really restricting your liberty without the consent of the governed. Welcome to Unwritten Law with Mark Chenoweth and John Vecchione. And John, we are joined today by first time guest on the Unwritten Law Program, our brand new senior litigation counsel colleague here at the New Civil Liberties Alliance, Jacob Huebert. Jacob, welcome to NCLA. Welcome to Unwritten Law.

Jacob Huebert: Well, thank you. It’s great to be here.

Mark Chenoweth: Well, we’re very excited to have you. And in no small part because you arrived just in time to work on an amicus brief in a very important case at the U.S. Supreme Court. This is the case of Donald J. Trump, President of the United States v. Lisa Cook, I guess still a governor on the Federal Reserve Board of Governors. Tell us what’s at stake in this case, Jacob.

Jacob Huebert: Sure. So, President Trump a while back announced that he was firing Lisa Cook from the Board of Governors of the Federal Reserve because he claimed there was evidence that she had lied on mortgage applications before she became a fed governor. And he said that was a good enough reason to fire her. Cook then sued. She argues that under federal law, under a federal statute, he can only fire her for cause, and has to give her due process, and he supposedly didn’t have good enough cause and didn’t give her process, according to her. And so, she’s suing.

So, the main issue the parties are arguing in this case is was there cause and did she get whatever process she was due. But in our brief, we highlight a more fundamental and more important issue, which is the President doesn’t need cause under the Constitution to fire officials who are exercising federal executive power. Under Article II of the Constitution, the President holds all executive power. And for him to be able to exercise the power he’s supposed to have, for him to be able to effectively take care to see that the laws are enforced as the Constitution requires, he needs to be able to remove any executive branch official anytime.

And fed governors are no exception. And that’s because they do exercise executive power. They enact regulations. They enforce those regulations. They fine people. They have violated their regulations. When you exercise that kind of power, you can’t be unaccountable or only accountable under certain circumstances that Congress thinks are good enough. The President needs to be able to remove any such official at any time. And so, we’re urging the court to recognize that and skip this debate about whether it was for cause or not. He doesn’t need cause in Congress’s eyes or the court’s eyes. He can do it because he thinks it’s the right thing to do in exercising executive power.

Mark Chenoweth: Absolutely. He can fire principal officers for any reason or no reason under Article II; it seems to me. But let’s dig into a little bit more about why Federal Reserve governors are exercising executive power. Because I think some people wanna say that the Fed is different. They wanna say that there’s nothing executive about setting interest rates. That the National Bank of the United States has always had this sort of quasi-independent status, and the Federal Reserve sort of harkens back to that kind of situation. One concern I have with that is these Federal Reserve governors don’t just set interest rates. They do all of these other things that look a whole lot like ordinary regulators at other agencies. Would you agree with that?

Jacob Huebert: Yeah. Definitely. The Fed is set up in a very complex way that’s hard for ordinary people to understand and keep straight. But the Fed has its Federal Open Market Committee that engages in open market operations and affects the money supply, and interest rates, and those things. But at the same time, the Fed Board of Governors regulates member institutions. That is banks in the United States. And it sets rules about all kinds of things. It sets rules about disclosures that have to be made to consumers. It sets rules related to anti-money laundering statutes. It regulates members’ advertisements of rates of interest on deposits.

And so, it is not just this entity that manages the monetary supply carefully and independently. It’s also much like other federal agencies. Make regulations and enforce those regulations against private parties, and can impose funds. And so, as long as they’re doing that, they’re certainly exercising executive power. Now, if you took the regulatory part of it away, maybe there would be some argument that they’re at least not acting in the way that an ordinary regulatory agency does, and maybe you could say that’s different. Although, you’d still have to explain how they fit into our structure of government because the Constitution doesn’t provide for – well, there’s a separate money branch of government that’s totally independent.

There’s just three. There’s the Legislative, Judicial, and Executive. And everybody exercising government power has to fall into one of those. And it’s beyond dispute that they’re exercising executive power when they act just like other federal regulators. Which they do.

Mark Chenoweth: Yeah. John, in that respect, I think Jacob’s right. That it’d be a tougher case for the Supreme Court if we were just looking at the open market activities of the Federal Reserve. But I don’t see how this is any different from say the FTC or some of these other independent agencies when you’re talking about just the regulatory piece of it.

John Vecchione: I have said for a long time that John Roberts is gonna find a way to keep the Federal Reserve independent, and it has to do with practical reasons. The reason the President’s doing this is he’s been inflationary his whole life. He loves easy money.

Mark Chenoweth: But he also loves gold, John.

John Vecchione: He loves gold, baby. Yeah.

Mark Chenoweth: So, there’s this dichotomy there.

John Vecchione: Exactly. Well, I think he loves gold leaf. But in any event, the thing is –

Mark Chenoweth: I think he loves gold bars, too. I’m not gonna give you that one.

John Vecchione: So, everyone’s worried about an inflationary Fed. That’s the reason we have this. But I guess the hook, other than saying we can’t allow this because the stock market will collapse and we’ll be old Argentina. I used the wrong –

Mark Chenoweth: I was gonna say. You can’t use Argentina anymore.

John Vecchione: We’ll be old Argentina, and it’ll be 80% inflation rate. But that’s –

Mark Chenoweth: That’s right. Milei might be the most Libertarian world leader.

John Vecchione: But that’s not a good constitutional argument, as we’ve said on here many times. So, the hook I think that they’re gonna use is the First and Second National Banks, and how they were run, and how they link to the Bank of England. The only way to get around what we just heard here today, what we’ve been discussing, and what we discuss every time we talk about these firings at the FTC or anywhere is they’re gonna have to make an original understanding argument having to do with the First and Second National Banks created by the founders.

So, they’re gonna have to say that these guys who made the Article I, Article II, Article III also made the First National Bank, and here’s how it was run. And that’s the only way, by sort of grandfathering it somehow, that they can uphold this as far as I can tell. And I don’t know enough about what that entailed.

Mark Chenoweth: And I don’t think that the First and Second National Banks included the kind of regulatory activity that the Federal Reserve engages in against other banks these days.

John Vecchione: Could be true. As I said, I’m way beyond my depth once you get into how they were run.

Mark Chenoweth: Sure. Well, the one thing you said to start with, John, that I hope is wrong, but I have reason to think you might be right is that Chief Justice Roberts will find a way to reach this result. I wish that Chief Justice Roberts would step back and realize sometimes the Supreme Court makes a decision that they don’t like the results of, but it’s consistent with the Constitution. And sometimes, it’s not their job to fix it. Sometimes, it’s Congress’s job to fix it. Congress can very easily pass a law separating the regulatory responsibilities of the Fed from the open market responsibilities of the Fed, and try to maintain the independence of the money supply that way without having all of this regulatory power not under self-government. Not under the elected president’s control. And Jacob, there are a couple professors you cite in the amicus brief here who have talked about something not unlike that kind of a solution.

Jacob Huebert: Yeah. That’s right. You could take these regulatory powers that they have and put them with other people in the Treasury Department. Wherever Congress would deem appropriate. I’ve seen the arguments as to why the Fed needs to be independent. So, they’re not too inflationary. It was a political premonition. That makes sense. But it doesn’t follow from that that you also need to bundle all these regulatory powers in the same people, and they need to be independent in exercising now.

So, if you wanna preserve the independence, take those powers away from them, and just leave them with their monetary responsibilities. And then, the government can argue why it’s Consittutional for them to exercise that authority. I might add, by the way, I’m not an economic historian. So, I definitely wanna be careful in talking about it. But the First and Second Banks of the United States were not like the Federal Reserve. The first one was privately owned, and the second one had a mix of private and public components, but they weren’t part of the federal government in the way that the Fed is, and they weren’t a regulatory body like a modern regulatory agency is and like the Fed is.

John Vecchione: And that was my other suggestion. It strikes me that they do have private corporations like PBS and things like that. So, I suppose they could go and do something of that nature still. But I have a feeling this is the big one for this. As far as Humphry’s executor going, that’s the Slaughter case. But this one is gonna be either the end of the exception on the president’s firing because it’s the only one I see where there’s any argument by anybody.

Mark Chenoweth: And it’s interesting, Jacob. So, two things that set this case apart. First of all, the fact that the court granted this case when it had already granted Slaughter tells you that the court might view these things differently. And then, in the Slaughter case, the Supreme Court upheld or refused to stay the dismissal of Commissioner Slaughter. So, she is not currently serving as a commissioner on the FTC. Whereas they did not uphold the firing of Cook in that same way. So, she is still a governor on the Federal Reserve Board of Governors even though that was taken up in a state posture, as well.

So, that tells you that maybe either the Supreme Court already views them differently or at least that maybe the vote counts are different on these two questions. At least, that’s what I’m detecting from that. Do you have thoughts on the differences between the two case?

Jacob Huebert: Well, I think the difference is that a lot of people think the Fed seems somehow different. It seems like it’s very important for it to have independence in a way that other agencies don’t for its core monetary functions. And we really don’t wanna mess with that. So, I think they wanna proceed with caution. I know in court cases, discussions of the president’s removal of power before. There have been passing comments about well, we might have to treat the Fed differently, of course, because people are so wary of political influence ruining the country’s money. As, of course, it has in many countries where politicians have direct control over the money supply.

That’s a totally legitimate concern, but that shouldn’t be a reason to cast aside Article II and the rest of the Constitution. It’s a reason to examine very carefully what aspects of this are consistent with upholding the president’s power under Article II, and what facets of this can be a little more insulated. And there’s an amicus brief that Professor Nielson filed in this case also in support of neither party.

Mark Chenoweth: This is Professor Jacob Huebertron Nielson at the University of Texas School of Law. Former Solicitor General of Texas. Formerly at BYU Law, I think, or University of Utah. Go ahead.

Jacob Huebert: And his brief suggests – he doesn’t take a position one way or another on whether Congress moved the Fed governors. But he does point out there’s other ways Congress could protect independence other than just imposing a four cause requirement. Maybe it could make a president have to at least say a reason before he fires somebody. So, the president can be a little more accountable for those and think twice. And he has other suggestions in there about how they might tweak the law where you don’t necessarily take away the president’s removal of power, but you set it up in some way where there’s some kind of political consequence or some kind of requirement on the president that would make the president think twice.

And I think the Supreme Court, as you suggested, shouldn’t be afraid to tell Congress, “You need to adjust this a little bit. You need to do a little better if you wanna serve these goals that you have related to independence while respecting the Constitution. It’s your job to figure that out. It’s not our job to let you get away with violating the Constitution because doing what you’re supposed to do would be hard.” They have to do that hard work. And of course, we don’t wanna make abrupt changes that we disrupt the entire economy, but I think the court can go about this in a way where it gives Congress notice of what it needs to do so that Congress can do it.

Mark Chenoweth: Yeah. I think that’s right. And I think it’s an awfully odd time to suggest that we’re concerned about inflationary policy when we’re fresh off of a couple of years where the Federal Reserve let inflation get up to about 9%. So, I think if Congress really wanted to reign inflation in, then maybe they could have a statutory peg to inflation. Say, you have to raise interest rates when inflation is approaching 2% or something. You could imagine different sorts of – and I would leave it to economists to figure out the right way to do that.

But the idea that the Federal Reserve is somehow unimpeachable, and that it never makes mistakes, and that the political actors would botch it is understandable. But I don’t think the Federal Reserve has done such a fantastic job recently. And as you put it in the brief, Jacob, the Federal Reserve is not exempt from the Constitution.

Jacob Huebert: Right. And the independence concern here I think is somewhat overblown in that the Fed Chair is of course the most powerful person in the Federal Reserve. A word, a sentence from the Fed Chair can shake the entire economy. And the president can remove the Fed Chair at will. There is no statutory four cause protection for the Federal Reserve Chair. And yet, you haven’t seen presidents firing them regularly to serve their political interests because I think a president who is at all savvy about the economy is going to understand that that is going to be very disruptive. You may think it serves your short term interests to replace them with somebody you like, but of course, it’s gonna be very disruptive and create a lot of uncertainty if you are firing people left and right.

John Vecchione: I will say Professor Nielson’s suggestion that the president has to say why he’s firing someone, I think that that’ll be the next forced speech case by the president afterwards. That he has a free speech right and they’re violating it by making him stay stuff.

Mark Chenoweth: That’s interesting. I’d go down that rabbit hole of government speech and everything. But one of the things that struck me in some of these articles that’ve been written recently about this case. John, do you know who the governor of the Federal Reserve Board of Chicago is?

John Vecchione: No.

Mark Chenoweth: It’s Austan Goolsbee. Austan Goolsbee was President Barack Obama’s Chief Financial Advisor. And these Federal Reserve Board terms are 14 year terms. So, you have someone in – and I don’t know exactly when he was appointed, but I’m guessing he was appointed either by Obama or Biden, and not by Trump during Trump’s first term.

John Vecchione: No.

Mark Chenoweth: So, you have these folks on the Federal Reserve Board who are – forget about their politics in terms of how they vote. The way that they look at these financial questions could be diametrically opposed to the way that the elected President of the United States looks at these. And unlike some of these other agencies where you might have a five or seven year term, and at least if you’re elected twice, you have some change of turning over the composition of the board, there’s no way a president could overturn – unless he has the ability to fire folks, there’s no way he could overturn the composition of the board when there are these 14 year terms. So, they really are operating outside of the self-government that contains all of the other agencies.

John Vecchione: Three and a half presidential terms.

Mark Chenoweth: Yeah. Those are very long terms. And Jacob, you talk about Article II. Vesting all executive power in the president. So, we have a lot of the same arguments against Cook being able to stay in office that we had against Slaughter staying as a commissioner at the FTC. Are there any differences? Is the argument exactly the same as to why the president has the Article II power in the FTC context and in the Federal Reserve Board of Governors context? Or, are there any reasons why we might think that the power is even stronger here or is somehow weaker with regard to Cook than it would be with regard to Slaughter?

Jacob Huebert: Well, I think the argument’s the same across the board. The Constitution says what it says about the president’s power, and it doesn’t vary depending on what area the federal government is regulating in when it comes to his removal power. It’s the same. All executive power is in the president. The president has the duty to take care. To see that the laws are faithfully executed across the board. And so, as long as you have people exercising executive power, it doesn’t matter whether they’re in the FTC, the FCC, the Fed, or anywhere else. The president’s power with respect to them is the same. The Constitution doesn’t make carve-outs.

John Vecchione: And I will add that both the Federal Reserve and the FTC were creations of the Wilson Administration. This was at the high water mark of Progressivism, and the court has seemed to be pruning that entire edifice over the last 100 years. So, our concerns might be overblown.

Mark Chenoweth: Well, we’ll see. And I certainly hope that the Supreme Court looks at things the way that you do on this, Jacob, and no doubt on many other things, as well. But we’ll find that out on future episodes of Unwritten Law. For now, we invite people to stay tuned. See what the Supreme Court does. Again, the case is Trump v Cook at the U.S. Supreme Court. It will be decided sometime next year. Thank you for being with us on your inaugural visit to Unwritten Law, Jacob.

Jacob Huebert: Thank you.

Mark Chenoweth: You’ve been listening to Unwritten Law. As we like to say here at NCLA, let judges judge, let legislators legislate, and stop bureaucrats from doing either.

[End of Audio]

Duration: 21 minutes