AILSA CHANG, HOST:
President Trump says that he is firing Federal Reserve governor Lisa Cook from the board of the central bank, alleging that she committed mortgage fraud. Cook says he does not have the authority to fire her and says that she will not resign. Her lawyer announced he will be filing a lawsuit to challenge this dismissal. It's the latest escalation in President Trump's battle for greater control over the Fed, which is meant to be an independent government agency.
But is it even legal for the president to fire Lisa Cook? Well, to help us answer that question, we're going to talk to Kathryn Judge. She's a law professor at Columbia University who focuses on financial regulation. Welcome.
KATHRYN JUDGE: Thank you for having me.
CHANG: So what does the law exactly say about a sitting president's ability to fire someone from the Fed?
JUDGE: So there's two different issues here. First is the statutory scheme. And what that says is that a president can only fire a governor of the Board of Governors of the Federal Reserve for cause. And the aim here by Congress was to make sure the Fed had the independence it needed to to take a longer-term view when it fights inflation.
And then there's a bunch of Supreme Court cases that have been bubbling up recently about the president's authority under Article 2. So how much prerogative does he have to choose who is an officer of the United States in his administration? And the Supreme Court has taken a very aggressive approach to Article 2 and a very broad reading of executive authority, but it has said the Fed is different. So it looks like that he actually has to show that there's a causal reason, a good reason for firing governor Cook.
CHANG: OK, well, what do you think, as a lawyer? Does the president have cause in this case? These mortgage fraud allegations haven't been proven out, right?
JUDGE: They're serious allegations, but in terms of actually having a basis for firing her, right now, it's dubious. Again, the context here matters a lot. We know it was very recently that he was trying to fire Jay Powell on the basis of the cost overruns of a renovation.
CHANG: Right.
JUDGE: He has continually attacked the Fed for its interest rate policy. And so that context makes a big difference and it adds a heightened suspicion, particularly given the fact that he's provided no due process. She's had no opportunity to be heard, no opportunity to present her side of the case.
CHANG: Right. We should remind people that Cook has not been indicted or charged with anything. She has not replied in detail to the actual allegations. So what happens now in terms of those allegations?
JUDGE: So she is bringing a claim that she has the right to hold on to her job. And there is this big question over what is the due process that she is owed? - because, ultimately, it doesn't mean much to say a president can only fire a governor for cause if all he has to do is make some allegations and then dismiss her without there being any process where she gets to say, here's my side of the story, before she is actually dismissed.
CHANG: You have mentioned that the president has already repeatedly threatened to remove the chair of the Federal Reserve, Jerome Powell, in this campaign to get the central bank to lower interest rates. Can you just step back and explain to people what is at stake here in terms of the Fed's independence?
JUDGE: The Fed's independence has already been incredibly compromised by not just the repeated attacks by President Trump but his effort to claim the right to remove - this is the second governor - without really having a solid foundation and without being willing to go through a process to show that he has adequately shown that he has a right to remove the individual in question.
CHANG: So as someone who thinks regularly about the importance of financial regulation, how concerned are you about this entire situation?
JUDGE: I'm incredibly concerned. The law plays a very important role, helping to protect the independence of the Federal Reserve. But the law alone has never sufficed to protect central bank independence. It's always required some degree of good faith on other actors in government. And if we have a president who is absolutely determined to make sure that the Federal Reserve is under his thumb, eventually he is likely to succeed, regardless of how this particular claim plays out. And that's going to have significant costs for the long-term health of the economy.
CHANG: Kathryn Judge of Columbia Law School, thank you very much.
JUDGE: Thank you. Transcript provided by NPR, Copyright NPR.
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