On the same morning, in two opinions both written by Chief Justice John Roberts, the Supreme Court tripped over itself. In Trump v. Slaughter, SCOTUS removed the protections that had shielded the heads of independent agencies since 1935, overruling Humphrey’s Executor and reaffirming that those who wield executive power answer to the executive. At the same time, in Trump v. Cook, it declared that the Federal Reserve gets an exception. President Trump’s hands are procedurally tied; Fed Governor Lisa Cook keeps her seat for now. The Roberts Court gave with one hand and took back with the other.
The Court split five-to-four in Cook, with Roberts and Justice Kavanaugh joining the three liberal justices. Justices Thomas, Alito, Gorsuch, and Barrett dissented. The dissenters had the better of the argument, and Justice Thomas had the best of it.
The majority did not pretend the Fed is constitutionally ordinary. It conceded that the usual rule cuts against Cook and reached for an exception “sanctioned by history.” The Fed, we are told, stands in “a distinct historical tradition of central bank independence that has long coexisted with Article II.” Apparently, because the Fed is old and important, it does not have to respect constitutional principles.
This is deeply troubling. Central bank independence in Roberts’s sense is unaccountability, plain and simple.
An exception carved for a single institution is not law in the proper sense of the term. Law is general; it applies the same rule to like cases. A doctrine that subjects every agency to presidential control — with “no ifs, ands, or quasis about it,” as Slaughter put it — and then exempts the most powerful agency of all is not based in principle. It is a preference. Justice Barrett, no firebrand, named the contradiction directly: “How can history support both a categorical rule and a carveout?” The majority never answers.
Justice Thomas took up the question the majority dodged. The Fed is a federal agency that wields executive power. The Board writes rules carrying the force of law, examines private financial institutions, levies fines, and bars individuals from the banking industry on pain of civil and criminal penalty. Its monetary and credit powers are similarly executive powers, carrying out as delegated functions from Congress. Under our Constitution, executive authority is vested in the president, and subordinates who exercise it are properly removable by him.
That is the heart of the matter. The majority could not deny it. In a revealing footnote, the Court declined to bless the Fed’s regulatory powers “attenuated from monetary policy.” This is a quiet admission that the supervisory and enforcement machinery the Court shielded sits uneasily with the logic of its own decision.
President Trump’s motives are beside the point. Whatever one thinks of the case for removing Cook, the Chief Executive decides to whom he delegates power. The prerogative does not depend on the wisdom of any particular exercise of it. That is what it means for the executive power to be vested in one accountable officer, rather than parcelled out among insulated technocrats. Justice Thomas plainly got it right.
The majority’s history is as shaky as its law. To explain why the country supposedly needed an insulated central bank, Roberts points to a century of “ruinous financial panics” from 1837 to 1907, which he attributes, citing the journalist Roger Lowenstein, to Andrew Jackson’s destruction of the Second Bank of the United States. Meddle with the central bank, the story goes, and chaos follows.
This gets cause and effect backwards. America’s recurrent panics were not because it lacked a central bank. They were the predictable product of how the government chose to regulate banking.
Two design defects stand out. First, restrictions on branching left the nation with thousands of small, undiversified, undercapitalized banks, each dependent on a single local economy. Second, the law tied note issue to holdings of government bonds, so the currency could not expand to meet seasonal demand. The resulting currency inelasticity turned every autumn harvest into a potential liquidity crunch. Banking economists Charles Calomiris and Stephen Haber have a phrase for a system built this way: fragile by design.
These were features of the antebellum state systems. Eventually they were federalized, but not repaired. The National Banking System of the 1860s was, at bottom, a Civil War financing strategy. It created demand for federal war debt by requiring national banks to back their notes with Treasury bonds. The system transferred the same fiscal prerogatives from the states to Washington and reproduced the same fragility on a national scale.
The Court’s majority almost perceives this. Its own opinion laments that the country had “no elastic currency that could expand to meet demand.” That’s right. But that inelasticity was a regulatory choice written into the banking acts, not a void waiting for an independent technocracy to fill. For proof, look north: Canada, which permitted nationwide branch banking and a flexible note issue, escaped most of America’s panics. It did not create its central bank until 1935. Stability came from sound banking structure, not from an unaccountable monetary authority.
Strip away the romantic history and the Fed’s exemption is exposed as a special dispensation with no footing in the Constitution. The Fed’s power, prominence, and importance cannot be an excuse for legal ad-hockery. The more concentrated power an organization possesses, the greater the need for it to answer to the public.
There is still room for hope. The Court ruled narrowly. It did not hold that Cook’s alleged misconduct fails to justify removal, did not vindicate her on the merits, and did not condemn the president. It found only that he owed her notice and an opportunity to respond before acting, leaving him free to try again.
SCOTUS’s constitutional carveout in Trump v. Cook simply does not mesh with its same-day decision in Trump v. Slaughter. Frankly, the findings are irreconcilable. Either for-cause removal protections violate the separation of powers by unconstitutionally limiting the president’s authority, or they don’t. The Court cannot indulge that contradiction forever. When it is finally forced to choose, the Constitution, not the Fed’s mystique, must decide the matter.
