1 00:00:02,520 --> 00:00:11,200 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. President Donald Trump achieved 2 00:00:11,240 --> 00:00:15,880 Speaker 1: reality TV fame by telling contestants on The Apprentice two. 3 00:00:16,040 --> 00:00:18,040 Speaker 2: Infamous words, you fired. 4 00:00:18,920 --> 00:00:21,319 Speaker 1: And on Wednesday, those words were at the center of 5 00:00:21,320 --> 00:00:24,239 Speaker 1: a Supreme Court case that could have big implications for 6 00:00:24,280 --> 00:00:28,240 Speaker 1: the global economy and the independence of the US Central Bank. 7 00:00:28,600 --> 00:00:31,400 Speaker 3: Just a meeting across a conference table finished with your fired. 8 00:00:31,480 --> 00:00:34,760 Speaker 1: I mean, that was Supreme Court Justice Neil Gorsch, speaking 9 00:00:35,000 --> 00:00:37,960 Speaker 1: as the court heard arguments over one of Trump's latest 10 00:00:38,040 --> 00:00:39,200 Speaker 1: attempted firings. 11 00:00:39,360 --> 00:00:43,640 Speaker 4: President Trump says he's removing FED Governor Lisa Cook effective immediately. 12 00:00:44,080 --> 00:00:47,879 Speaker 2: He cites allegations that she committed mortgage fraud, which she denies. 13 00:00:48,200 --> 00:00:50,960 Speaker 4: No president has fired a sitting governor in the one 14 00:00:51,080 --> 00:00:53,360 Speaker 4: hundred and twelve year history of the FED. 15 00:00:53,840 --> 00:00:57,960 Speaker 1: Bloomberg reporter Amara Amoqua, who covers the Federal Reserve, was 16 00:00:58,000 --> 00:00:58,480 Speaker 1: in the room. 17 00:00:58,840 --> 00:01:00,720 Speaker 5: This was my first time at his Spreme Court hearing. 18 00:01:00,760 --> 00:01:03,120 Speaker 5: I mean, it's not every day that a FED related 19 00:01:03,160 --> 00:01:06,520 Speaker 5: matter comes before the Supreme Court, And you know, when 20 00:01:06,600 --> 00:01:08,520 Speaker 5: all the reporters walked into the room, we were all 21 00:01:08,600 --> 00:01:10,840 Speaker 5: kind of just kind of stretching our next to see 22 00:01:11,040 --> 00:01:14,280 Speaker 5: who was in sort of the public part of the room. 23 00:01:15,560 --> 00:01:18,679 Speaker 1: Former FED Chair Ben Bernanke was there, so was current 24 00:01:18,760 --> 00:01:19,880 Speaker 1: Chair Jerome Powell. 25 00:01:20,200 --> 00:01:23,360 Speaker 4: It is pretty noteworthy that Jay Powell came to this argument. 26 00:01:23,720 --> 00:01:26,920 Speaker 1: Greg Storre is a Supreme Court reporter for Bloomberg who's 27 00:01:26,959 --> 00:01:28,600 Speaker 1: been following Cook's case. 28 00:01:28,760 --> 00:01:32,040 Speaker 4: Up until very recently. J Powell has tried to remain 29 00:01:32,160 --> 00:01:35,920 Speaker 4: studiously neutral in this case. The FED itself has not 30 00:01:36,000 --> 00:01:38,600 Speaker 4: been taking a position in this case. 31 00:01:39,000 --> 00:01:43,120 Speaker 1: Wednesday's hearing came just over a week after federal prosecutors 32 00:01:43,160 --> 00:01:46,640 Speaker 1: served grand jury subpoenas to the Central Bank over renovations 33 00:01:46,680 --> 00:01:51,240 Speaker 1: at its headquarters and congressional testimony Powell gave about that project. 34 00:01:51,760 --> 00:01:54,760 Speaker 4: The fact that he showed up, I think did send 35 00:01:54,760 --> 00:01:57,560 Speaker 4: the message about how important he sees it as being, 36 00:01:57,680 --> 00:02:01,160 Speaker 4: especially after that rather extra ordinary statement that he gave 37 00:02:01,200 --> 00:02:04,200 Speaker 4: the other night about the criminal investigation involving him. 38 00:02:04,520 --> 00:02:07,120 Speaker 6: No one, certainly not the Chair of the Federal Reserve 39 00:02:07,480 --> 00:02:11,120 Speaker 6: is above the law. But this unprecedented action should be 40 00:02:11,160 --> 00:02:14,640 Speaker 6: seen in the broader context of the administration's threats and 41 00:02:14,720 --> 00:02:15,600 Speaker 6: ongoing pressure. 42 00:02:16,160 --> 00:02:21,440 Speaker 5: That is a remarkable departure from the posture that Chair 43 00:02:21,520 --> 00:02:24,800 Speaker 5: Powell and the FED have taken towards all of the 44 00:02:24,840 --> 00:02:28,000 Speaker 5: attacks that President Trump has directed at them since he 45 00:02:28,040 --> 00:02:30,800 Speaker 5: returned to office last year. And so I think it 46 00:02:30,880 --> 00:02:33,160 Speaker 5: raises the stakes in the Lisa Cook case right because 47 00:02:33,639 --> 00:02:36,679 Speaker 5: if the justices signaled that it is in a way 48 00:02:36,720 --> 00:02:39,280 Speaker 5: easier to remove a FED governor than has been thought 49 00:02:39,280 --> 00:02:42,560 Speaker 5: of in the past, then it could be open season 50 00:02:42,720 --> 00:02:43,760 Speaker 5: on any FED governor. 51 00:02:49,520 --> 00:02:51,800 Speaker 1: I'm Sarah Holder, and this is the big take from 52 00:02:51,840 --> 00:02:56,200 Speaker 1: Bloomberg News Today. On the show, Bloomberg reporters Amara Amoquay 53 00:02:56,280 --> 00:02:59,560 Speaker 1: and Greg Store take us inside the Supreme Court for 54 00:02:59,639 --> 00:03:00,640 Speaker 1: Trump the Cook. 55 00:03:01,400 --> 00:03:03,000 Speaker 2: We take a look at the arguments from. 56 00:03:02,840 --> 00:03:05,680 Speaker 1: Both sides and unpack what a ruling could mean for 57 00:03:05,840 --> 00:03:16,720 Speaker 1: FED independence, for the economy, and for Trump. President Trump 58 00:03:16,760 --> 00:03:19,560 Speaker 1: tried to fire Lisa Cook eight months ago. In a 59 00:03:19,639 --> 00:03:24,240 Speaker 1: letter posted on truth Social Almost immediately, she sued the president, 60 00:03:24,560 --> 00:03:27,519 Speaker 1: saying his effort to fire her could cause irreparable harm 61 00:03:27,600 --> 00:03:31,120 Speaker 1: to the US economy. A district court sided with Cook, 62 00:03:31,440 --> 00:03:34,080 Speaker 1: saying she could remain on the job while she continues 63 00:03:34,120 --> 00:03:35,680 Speaker 1: to challenge Trump's attempt. 64 00:03:36,120 --> 00:03:38,480 Speaker 5: That decision then went to the appellate level, and the 65 00:03:38,520 --> 00:03:41,400 Speaker 5: appeals court said the same thing essentially cited with Lisa 66 00:03:41,400 --> 00:03:43,800 Speaker 5: Cook that she could stay on the job while she 67 00:03:43,840 --> 00:03:46,920 Speaker 5: fights to stay on the job permanently. And so then 68 00:03:47,000 --> 00:03:49,560 Speaker 5: the administration went to the Supreme Court and that is 69 00:03:49,560 --> 00:03:50,800 Speaker 5: how we landed there today. 70 00:03:51,280 --> 00:03:54,480 Speaker 1: But this isn't a typical Supreme Court case. It's on 71 00:03:54,520 --> 00:03:57,560 Speaker 1: the court's emergency docket. It came about after the Trump 72 00:03:57,600 --> 00:04:01,800 Speaker 1: administration filed an emergency application asking the court to let 73 00:04:01,880 --> 00:04:05,440 Speaker 1: them remove Cook immediately even as a legal fight continues. 74 00:04:06,040 --> 00:04:09,600 Speaker 1: And what's the fundamental question that the judges are being 75 00:04:09,680 --> 00:04:13,080 Speaker 1: asked to consider here? What is this case really about? 76 00:04:13,360 --> 00:04:16,960 Speaker 4: So you've basically got two things that Lisa Cook is arguing. One, 77 00:04:17,200 --> 00:04:20,800 Speaker 4: she says, I can't be fired without some sort of 78 00:04:20,839 --> 00:04:23,760 Speaker 4: process more than just a social media post, which is 79 00:04:23,839 --> 00:04:27,039 Speaker 4: how she was notified that Trump was trying to remove her. 80 00:04:27,440 --> 00:04:29,279 Speaker 4: And so there's a question of is she entitled to 81 00:04:29,640 --> 00:04:32,560 Speaker 4: a chance to make her case before she's removed. And 82 00:04:32,560 --> 00:04:36,239 Speaker 4: then the bigger question is, even if these allegations are true, 83 00:04:36,240 --> 00:04:39,359 Speaker 4: and the allegations are that she engaged in mortgage frauds, 84 00:04:39,440 --> 00:04:42,440 Speaker 4: she denies that vehemently, and her lawyer said at most 85 00:04:42,520 --> 00:04:46,039 Speaker 4: it was inadvertent. Even if those are true, is that 86 00:04:46,320 --> 00:04:49,080 Speaker 4: enough grounds for the president to fire her, So that's 87 00:04:49,120 --> 00:04:52,400 Speaker 4: sort of the issues in the backdrop. And then because 88 00:04:52,560 --> 00:04:54,640 Speaker 4: it is coming to the court in the context of 89 00:04:54,680 --> 00:04:58,080 Speaker 4: an emergency application, not looking for a final ruling, the 90 00:04:58,160 --> 00:05:02,039 Speaker 4: court is also thinking about what would be the consequences 91 00:05:02,080 --> 00:05:05,280 Speaker 4: in the short term of say, letting Trump fire her 92 00:05:05,640 --> 00:05:08,720 Speaker 4: for the time being, And they're thinking about things like 93 00:05:08,920 --> 00:05:11,240 Speaker 4: what would the impact on the markets be, what would 94 00:05:11,279 --> 00:05:15,480 Speaker 4: the impact on FED independence be? So there are kind of, 95 00:05:15,560 --> 00:05:18,120 Speaker 4: you know, non legal factors that are at least in 96 00:05:18,200 --> 00:05:19,560 Speaker 4: the air in this argument. 97 00:05:20,800 --> 00:05:24,000 Speaker 1: Mara, how central were those broader questions going into these 98 00:05:24,400 --> 00:05:27,360 Speaker 1: oral arguments about not just the question of whether or 99 00:05:27,480 --> 00:05:31,279 Speaker 1: not Trump has the power to fire or remove Lisa Cook, 100 00:05:31,320 --> 00:05:35,320 Speaker 1: but the questions around presidential authority and the future of 101 00:05:35,360 --> 00:05:35,720 Speaker 1: the FED. 102 00:05:36,040 --> 00:05:38,000 Speaker 5: As someone who covers the FED, I mainly talk to 103 00:05:38,000 --> 00:05:41,840 Speaker 5: FED watchers and economists. I don't think that they're necessarily 104 00:05:41,920 --> 00:05:44,799 Speaker 5: focused on sort of the nitty gritty legal details. Everyone 105 00:05:44,880 --> 00:05:47,360 Speaker 5: is kind of thinking about the broader context, which is 106 00:05:47,400 --> 00:05:51,919 Speaker 5: that the attempt to fire Lisa Cook comes amid the 107 00:05:51,920 --> 00:05:56,240 Speaker 5: Trump administrations and the president's really effort to try to 108 00:05:56,320 --> 00:05:58,960 Speaker 5: have more influence over the FED and try to have 109 00:05:59,040 --> 00:06:02,520 Speaker 5: more influence over monetary policy. The President has made clear 110 00:06:02,560 --> 00:06:05,520 Speaker 5: that he wants to nominate a FED chair to replace 111 00:06:05,600 --> 00:06:07,600 Speaker 5: Jerome pal when his term is up, a FED chair 112 00:06:07,640 --> 00:06:11,240 Speaker 5: who will cut interest rates drastically. He has pressured the 113 00:06:11,240 --> 00:06:14,960 Speaker 5: FED from several different sides, and so I think FED 114 00:06:15,000 --> 00:06:17,839 Speaker 5: watchers are looking at this and saying, if the President 115 00:06:17,960 --> 00:06:21,919 Speaker 5: is able to remove Lisa Cook over an unproven mortgage 116 00:06:21,960 --> 00:06:27,000 Speaker 5: fraud allegation, that would essentially erode this job protection that 117 00:06:27,080 --> 00:06:30,320 Speaker 5: FED governors enjoy in a way that would really then 118 00:06:30,400 --> 00:06:34,000 Speaker 5: erode FED independence and the ability of the FED to 119 00:06:34,040 --> 00:06:36,840 Speaker 5: set interest rates free of political pressure. 120 00:06:38,080 --> 00:06:40,600 Speaker 1: With that backdrop, I want to walk through the actual 121 00:06:40,680 --> 00:06:43,960 Speaker 1: arguments that the court hurt this week. So let's start 122 00:06:44,000 --> 00:06:47,640 Speaker 1: with Cook, the plaintiff in this case. Greg What was 123 00:06:47,640 --> 00:06:50,679 Speaker 1: it the center of her lawyer's argument to the court. 124 00:06:51,080 --> 00:06:53,480 Speaker 4: We will hear an argument this morning in case twenty 125 00:06:53,520 --> 00:06:57,960 Speaker 4: five A three twelve Trump versus Cook. Whether essentially are 126 00:06:58,480 --> 00:07:03,920 Speaker 4: two prongs that she was not given any process, not 127 00:07:03,960 --> 00:07:08,000 Speaker 4: given a chance to make her case that any problems 128 00:07:08,000 --> 00:07:13,360 Speaker 4: with the mortgage applications were inadvertent, And secondly, that this 129 00:07:13,720 --> 00:07:16,760 Speaker 4: allegation is not enough for the President to fire her. 130 00:07:17,320 --> 00:07:21,480 Speaker 4: Coupled with that, the lawyer for Lisa Cook, Paul Clement, 131 00:07:21,760 --> 00:07:25,400 Speaker 4: was also talking about the impact on FED independence. 132 00:07:26,120 --> 00:07:30,000 Speaker 7: It's less important that the president have full faith in 133 00:07:30,120 --> 00:07:34,560 Speaker 7: every single governor, and it's more important that the markets 134 00:07:34,720 --> 00:07:38,080 Speaker 7: and the public have faith in the independence of the 135 00:07:38,120 --> 00:07:41,920 Speaker 7: FED from the President and from Congress. 136 00:07:42,440 --> 00:07:45,880 Speaker 4: You know, this is something the Supreme Court has suggested earlier. 137 00:07:46,160 --> 00:07:49,679 Speaker 4: It cares about, and so trying to make the case 138 00:07:49,760 --> 00:07:53,280 Speaker 4: that whatever you think about those legal questions, at the 139 00:07:53,400 --> 00:07:57,200 Speaker 4: end of the day, just be really careful about doing 140 00:07:57,240 --> 00:08:00,560 Speaker 4: something in this case that would shatter that FED in dependence. 141 00:08:02,360 --> 00:08:05,240 Speaker 1: And Greg, what about the lawyers arguing in favor of 142 00:08:05,360 --> 00:08:09,239 Speaker 1: President Trump, how did they counter that argument in front 143 00:08:09,280 --> 00:08:10,600 Speaker 1: of the justices. 144 00:08:11,000 --> 00:08:14,320 Speaker 4: So, US Solicitor General John Sower, who's the top Supreme 145 00:08:14,320 --> 00:08:17,440 Speaker 4: Court lawyer for the Trump administration, had multiple levels to 146 00:08:17,480 --> 00:08:21,720 Speaker 4: his argument. One level was, Hey, the Supreme Court has 147 00:08:21,760 --> 00:08:24,880 Speaker 4: no business here. This is something the president has total 148 00:08:25,080 --> 00:08:29,200 Speaker 4: authority over, total discretion. That didn't get him very far too, 149 00:08:30,040 --> 00:08:33,280 Speaker 4: he said. On that issue of process, he said, first, 150 00:08:33,520 --> 00:08:37,080 Speaker 4: Lisa Cook doesn't have any property right in this job. 151 00:08:37,240 --> 00:08:40,320 Speaker 4: She's not doing any process because she's not entitled to 152 00:08:40,440 --> 00:08:42,599 Speaker 4: this job. He also said that even if she is 153 00:08:42,760 --> 00:08:45,800 Speaker 4: entitled to some process. She got plenty, She was told 154 00:08:45,840 --> 00:08:49,439 Speaker 4: publicly that she was being fired, and she has not responded, 155 00:08:49,720 --> 00:08:53,840 Speaker 4: in his view, in any adequate way to those allegations. 156 00:08:54,400 --> 00:08:58,520 Speaker 4: And that also met some resistance, Justice Barrett asking, you know, 157 00:08:58,800 --> 00:09:00,520 Speaker 4: why would it be so hard to to give her 158 00:09:00,520 --> 00:09:03,480 Speaker 4: a hearing. One step you could take to reduce your 159 00:09:03,520 --> 00:09:06,600 Speaker 4: irreparable harm to show that there really was cause is 160 00:09:06,640 --> 00:09:08,200 Speaker 4: just to have a hearing. Why not? 161 00:09:09,600 --> 00:09:11,760 Speaker 6: I don't think it's a question of resource allocation. It's 162 00:09:11,800 --> 00:09:14,760 Speaker 6: our position that adequate process was already provided. 163 00:09:15,280 --> 00:09:19,040 Speaker 4: And then finally he made the argument that if these 164 00:09:19,080 --> 00:09:23,000 Speaker 4: allegations are true, this is not somebody we want setting 165 00:09:23,120 --> 00:09:26,200 Speaker 4: interest rates. It means that it's somebody untrustworthy. 166 00:09:26,720 --> 00:09:29,560 Speaker 7: The American people should not have their interest rates determined 167 00:09:29,559 --> 00:09:33,280 Speaker 7: by someone who was at best grossly negligent and obtaining 168 00:09:33,320 --> 00:09:35,319 Speaker 7: favorable interest rates for herself. 169 00:09:35,679 --> 00:09:38,840 Speaker 4: And that was sort of where the justices had the 170 00:09:39,000 --> 00:09:42,600 Speaker 4: harder time, because that's a kind of a judgment call 171 00:09:42,720 --> 00:09:46,400 Speaker 4: that they seemed reluctant to get too deep into to 172 00:09:46,480 --> 00:09:50,360 Speaker 4: try to figure out whether these allegations were the kind 173 00:09:50,400 --> 00:09:54,040 Speaker 4: of things that were serious enough that the president ought 174 00:09:54,040 --> 00:09:56,560 Speaker 4: to be allowed to fire her. For cause, and. 175 00:09:56,480 --> 00:09:59,760 Speaker 1: Whether they were material to how she does her job, 176 00:10:00,040 --> 00:10:03,080 Speaker 1: whether she fulfills her responsibilities in the right way. 177 00:10:03,520 --> 00:10:06,680 Speaker 4: Exactly. These are allegations about things that happened before she 178 00:10:06,800 --> 00:10:09,680 Speaker 4: became a FED governor, and there was a question of 179 00:10:09,960 --> 00:10:12,760 Speaker 4: given that it's not something that was happening while she's 180 00:10:12,800 --> 00:10:16,199 Speaker 4: doing the job, is it something that is of lesser importance? 181 00:10:18,240 --> 00:10:21,480 Speaker 1: And amara, how did the justices respond to these arguments? 182 00:10:21,520 --> 00:10:24,319 Speaker 1: What were you seeing in the room about what they 183 00:10:24,320 --> 00:10:26,400 Speaker 1: were paying attention to and asking about? 184 00:10:26,640 --> 00:10:29,000 Speaker 5: Well, I thought one of the most notable moments was 185 00:10:29,040 --> 00:10:33,520 Speaker 5: when Justice Kavanaugh questioned sour about FED independence and he 186 00:10:33,559 --> 00:10:36,839 Speaker 5: basically started that line of questioning asking him why is 187 00:10:36,880 --> 00:10:40,439 Speaker 5: FED independence important? And then he went on to basically 188 00:10:40,480 --> 00:10:44,760 Speaker 5: talk about how you know, a decision to remove Lisako 189 00:10:44,840 --> 00:10:47,120 Speaker 5: could essentially create a slippery slope where you have a 190 00:10:47,160 --> 00:10:51,120 Speaker 5: cycle where presidents continuously kind of remove governors at will. 191 00:10:51,200 --> 00:10:54,640 Speaker 3: Because if this were set as a precedent, it seems 192 00:10:54,679 --> 00:11:00,520 Speaker 3: to me, just thinking big picture, what goes around comes around. 193 00:11:01,240 --> 00:11:07,160 Speaker 3: All the current president's appointees would likely be removed for 194 00:11:07,360 --> 00:11:10,120 Speaker 3: clause on January twenty, twenty twenty nine. 195 00:11:10,160 --> 00:11:10,600 Speaker 2: If there's a. 196 00:11:10,559 --> 00:11:13,079 Speaker 5: Democratic that was a point in the hearing where you 197 00:11:13,120 --> 00:11:15,720 Speaker 5: saw people kind of perk up because it kind of 198 00:11:15,720 --> 00:11:17,840 Speaker 5: got to the heart of the matter, the thing that 199 00:11:17,880 --> 00:11:20,120 Speaker 5: we've all been thinking about, which is the question of 200 00:11:20,160 --> 00:11:21,040 Speaker 5: FED independence. 201 00:11:21,640 --> 00:11:24,680 Speaker 1: I mean to tie this all together, Greg, after hearing 202 00:11:25,360 --> 00:11:29,040 Speaker 1: these arguments and the justices responses, what's your sense of 203 00:11:29,080 --> 00:11:33,040 Speaker 1: where the justices are leaning on this case as a 204 00:11:33,080 --> 00:11:34,280 Speaker 1: body or individually. 205 00:11:34,800 --> 00:11:37,000 Speaker 4: It sure seemed like and not just a you know, 206 00:11:37,080 --> 00:11:40,679 Speaker 4: a five justice majority, but a larger majority was really 207 00:11:40,720 --> 00:11:44,280 Speaker 4: concerned about the prospect of what it would mean if 208 00:11:45,000 --> 00:11:48,079 Speaker 4: the court sided with Donald Trump and let him fire her, 209 00:11:48,200 --> 00:11:51,079 Speaker 4: at least right away. It seems like the big question 210 00:11:51,160 --> 00:11:54,200 Speaker 4: now is a court going to issue a narrow ruling 211 00:11:54,200 --> 00:11:56,040 Speaker 4: that just kicks the can down the road a little 212 00:11:56,080 --> 00:11:58,839 Speaker 4: bit and maybe it comes back to them a ruling 213 00:11:58,840 --> 00:12:00,800 Speaker 4: maybe that says, hey, she's got to have some sort 214 00:12:00,840 --> 00:12:04,200 Speaker 4: of opportunity to be heard before you fire her. Or 215 00:12:04,240 --> 00:12:07,800 Speaker 4: do they do something broader that says allegations of these 216 00:12:07,840 --> 00:12:10,679 Speaker 4: sort are not the kind of things that let a 217 00:12:10,679 --> 00:12:14,280 Speaker 4: president remove a FED governor. That would give much deeper 218 00:12:14,320 --> 00:12:17,840 Speaker 4: protection for FED governors going forward. That would be a 219 00:12:18,000 --> 00:12:20,880 Speaker 4: very big deal. Whether the Court is ready to go 220 00:12:21,000 --> 00:12:23,119 Speaker 4: there yet that's not clear. 221 00:12:26,200 --> 00:12:29,199 Speaker 1: Up next what prior rulings by the Court could tell 222 00:12:29,280 --> 00:12:33,040 Speaker 1: us about where the justices might land this time, and 223 00:12:33,360 --> 00:12:36,319 Speaker 1: just how big the stakes are for Trump, for the FED, 224 00:12:36,720 --> 00:12:49,720 Speaker 1: and for the US economy. This isn't the first time 225 00:12:49,840 --> 00:12:52,079 Speaker 1: the Supreme Court has been asked to weigh in on 226 00:12:52,240 --> 00:12:56,840 Speaker 1: President Trump's power to fire top officials at independent federal agencies. 227 00:12:57,679 --> 00:13:00,760 Speaker 1: Last year, the Court ruled in his favor, allowing him 228 00:13:00,800 --> 00:13:04,080 Speaker 1: to oust officials at the National Labor Relations Board and 229 00:13:04,160 --> 00:13:08,480 Speaker 1: the Merit System's Protection Board, but notably, it exempted the 230 00:13:08,520 --> 00:13:12,520 Speaker 1: Federal Reserve from that decision. It was an indication that 231 00:13:12,559 --> 00:13:16,880 Speaker 1: the Court was prioritizing FED independence, an argument that Lisa 232 00:13:16,920 --> 00:13:20,120 Speaker 1: Cook's lawyer Paul Clement invoked on Wednesday. 233 00:13:20,600 --> 00:13:23,400 Speaker 7: There's a reason that monetary policy has been treated differently 234 00:13:24,200 --> 00:13:27,120 Speaker 7: for lo these many years, and there's a reason that 235 00:13:27,200 --> 00:13:30,000 Speaker 7: the markets watch the FED a little more closely than 236 00:13:30,040 --> 00:13:33,120 Speaker 7: they watch really any other agency of government. 237 00:13:33,480 --> 00:13:36,600 Speaker 1: So I asked Bloomberg Fed reporter amea Amokway to walk 238 00:13:36,640 --> 00:13:39,320 Speaker 1: me through what it would mean if the Court decided 239 00:13:39,360 --> 00:13:42,679 Speaker 1: to rule in Trump's favor this time and allow the 240 00:13:42,679 --> 00:13:45,360 Speaker 1: President to fire a FED governor in this way. 241 00:13:45,640 --> 00:13:48,440 Speaker 5: If you talk to any mainstream economist, when a central 242 00:13:48,440 --> 00:13:53,520 Speaker 5: bank is independent, it provides for better economic outcomes. It 243 00:13:53,600 --> 00:13:58,160 Speaker 5: reassures investors, it reassures the public that a central bank 244 00:13:58,320 --> 00:14:02,240 Speaker 5: like the FED is willing to take decisions that may 245 00:14:02,280 --> 00:14:06,600 Speaker 5: be unpopular to produce the best economic outcomes, particularly when 246 00:14:06,640 --> 00:14:09,199 Speaker 5: it comes to inflation. So a good example is, in 247 00:14:09,240 --> 00:14:11,319 Speaker 5: the wake of the pandemic, we had an inflationary surge 248 00:14:11,520 --> 00:14:14,320 Speaker 5: in the United States and the FED raised interest rates 249 00:14:14,320 --> 00:14:19,240 Speaker 5: aggressively to combat that. Painful for Americans, but necessary to 250 00:14:19,800 --> 00:14:22,360 Speaker 5: push back against inflation, right. And the FED was able 251 00:14:22,400 --> 00:14:25,360 Speaker 5: to do that because it is an independent institution and 252 00:14:25,400 --> 00:14:29,720 Speaker 5: it doesn't have to worry about the political ramifications of 253 00:14:29,840 --> 00:14:33,400 Speaker 5: taking unpopular steps. And so the idea is that if 254 00:14:33,440 --> 00:14:36,080 Speaker 5: you have a less independent FED, if you have a 255 00:14:36,160 --> 00:14:40,440 Speaker 5: board of governors where people can be fired basically at 256 00:14:40,440 --> 00:14:42,880 Speaker 5: will by the President, then perhaps they aren't going to 257 00:14:42,920 --> 00:14:45,880 Speaker 5: be willing to take those unpopular steps when necessary. And 258 00:14:45,920 --> 00:14:48,200 Speaker 5: then maybe you have an economy that is less strong, 259 00:14:48,240 --> 00:14:50,680 Speaker 5: You have an economy where inflation is not well controlled, 260 00:14:51,040 --> 00:14:54,160 Speaker 5: and that in turn erodes confidence that investors both here 261 00:14:54,160 --> 00:14:57,800 Speaker 5: and abroad have in the US economy and our assets. 262 00:14:57,800 --> 00:15:00,360 Speaker 5: So it would have implications for the US dollar, would 263 00:15:00,360 --> 00:15:03,200 Speaker 5: have implications for US stocks, it would have implications for 264 00:15:03,280 --> 00:15:07,640 Speaker 5: US treasuries, and so economists worn of basically a downward 265 00:15:07,640 --> 00:15:11,560 Speaker 5: spiral if we see FED independence eroded. 266 00:15:12,840 --> 00:15:16,680 Speaker 1: And Greg let's play out the other possible scenario here. 267 00:15:16,680 --> 00:15:19,560 Speaker 1: If the court rules against Trump, as perhaps seems more 268 00:15:19,640 --> 00:15:23,760 Speaker 1: likely after these oral arguments, where does that put the president? 269 00:15:24,440 --> 00:15:27,560 Speaker 1: More broadly, how big of a loss is that? 270 00:15:28,200 --> 00:15:31,560 Speaker 4: It's significant, But keep in mind this is a Supreme 271 00:15:31,600 --> 00:15:34,040 Speaker 4: Court that, over the last year in particular, has that 272 00:15:34,200 --> 00:15:38,040 Speaker 4: a lot of things to expand presidential authority, and so 273 00:15:38,280 --> 00:15:41,560 Speaker 4: in the non FED context, the Court is still giving 274 00:15:41,640 --> 00:15:44,840 Speaker 4: him very broad power to fire other people in the 275 00:15:44,840 --> 00:15:48,720 Speaker 4: federal government when he wants to. But in terms of 276 00:15:48,760 --> 00:15:52,600 Speaker 4: the FED, it means that the FED continues as we've 277 00:15:52,640 --> 00:15:55,920 Speaker 4: known it for the most part. It means that even 278 00:15:55,920 --> 00:15:58,560 Speaker 4: though they'll still be subject to political pressure, the bully 279 00:15:58,560 --> 00:16:02,640 Speaker 4: pulput the president will be, you know, no doubt still 280 00:16:02,680 --> 00:16:05,160 Speaker 4: talking about you should lower interest rates. He's going to 281 00:16:05,200 --> 00:16:08,200 Speaker 4: have the ability to appoint a new chair and other 282 00:16:08,280 --> 00:16:12,080 Speaker 4: members going forward. But in terms of where the FED 283 00:16:12,160 --> 00:16:15,920 Speaker 4: stands legally, it will be basically where it has always stood, 284 00:16:16,000 --> 00:16:20,680 Speaker 4: which is once members are appointed and confirmed by the Senate, 285 00:16:21,120 --> 00:16:23,760 Speaker 4: unless they do something are really really wrong, they are 286 00:16:23,800 --> 00:16:25,560 Speaker 4: there throughout their term. 287 00:16:26,560 --> 00:16:29,240 Speaker 1: And against this backdrop, Amera, the decision that we're waiting 288 00:16:29,280 --> 00:16:33,280 Speaker 1: for seems quite high stakes. But I'm wondering, you know, 289 00:16:33,320 --> 00:16:35,960 Speaker 1: you've described the Supreme Court as the Fed's last line 290 00:16:36,280 --> 00:16:39,600 Speaker 1: of defense in the past. Are there other lines well? 291 00:16:39,640 --> 00:16:44,600 Speaker 5: Prior to us learning about the DOJ investigation, it really 292 00:16:44,720 --> 00:16:47,840 Speaker 5: had been the Supreme Court with their initial sort of 293 00:16:47,840 --> 00:16:50,720 Speaker 5: decision to allow Lisa Cook to remain on the job. 294 00:16:51,200 --> 00:16:52,960 Speaker 5: That was kind of the first time we saw any 295 00:16:53,000 --> 00:16:56,360 Speaker 5: of Washington's kind of institutions come to the fed's defense 296 00:16:56,840 --> 00:17:00,400 Speaker 5: because really Republicans in Congress, since they can troll built 297 00:17:00,440 --> 00:17:04,000 Speaker 5: chambers of Congress, have been very reticent to sort of 298 00:17:04,040 --> 00:17:06,360 Speaker 5: push back on all the attacks from the Trump administration 299 00:17:06,960 --> 00:17:10,040 Speaker 5: on the FED. We haven't really seen much market reaction 300 00:17:10,160 --> 00:17:13,000 Speaker 5: to some of these attacks. You know, last year, over 301 00:17:13,040 --> 00:17:16,280 Speaker 5: the spring and early summer, Trump was sort of talking 302 00:17:16,359 --> 00:17:18,359 Speaker 5: about firing chair Pow. We didn't see much of a 303 00:17:18,400 --> 00:17:21,240 Speaker 5: market reaction after he said he was firing re Lisa Cook. 304 00:17:21,359 --> 00:17:23,400 Speaker 5: We didn't see much of a market reaction, and so 305 00:17:23,720 --> 00:17:26,000 Speaker 5: the idea that the markets act as a check on 306 00:17:26,119 --> 00:17:30,080 Speaker 5: President Trump wasn't really applicable in the case of the Fed. 307 00:17:30,080 --> 00:17:33,040 Speaker 5: We didn't really see much market reaction, But now with 308 00:17:33,080 --> 00:17:35,959 Speaker 5: this dj investigation, we did see a few Republicans come 309 00:17:36,000 --> 00:17:38,560 Speaker 5: out and say, you know, this is going a little 310 00:17:38,600 --> 00:17:40,560 Speaker 5: too far. We kind of need to pull this back. 311 00:17:40,760 --> 00:17:43,160 Speaker 5: And so I think this investigation is being seen as 312 00:17:43,560 --> 00:17:45,679 Speaker 5: sort of a more serious threat, in part because it 313 00:17:45,720 --> 00:17:48,920 Speaker 5: is a criminal investigation than some of the other sort 314 00:17:48,920 --> 00:17:51,040 Speaker 5: of attacks that we've seen from the Trump administration. 315 00:17:53,800 --> 00:17:56,679 Speaker 1: And Greg, I also want to understand what comes next. 316 00:17:56,840 --> 00:17:58,919 Speaker 1: This is on the court's emergency docket, So what does 317 00:17:58,960 --> 00:18:01,800 Speaker 1: that actually mean for when and weather we'll get a 318 00:18:01,840 --> 00:18:04,919 Speaker 1: conclusive ruling on whether or not Lisa Cook can be 319 00:18:04,960 --> 00:18:07,119 Speaker 1: removed from her post as FED governor. 320 00:18:07,320 --> 00:18:08,919 Speaker 4: The only thing I can say with a lot of 321 00:18:08,960 --> 00:18:11,639 Speaker 4: confidence is that it will come out sometime before the 322 00:18:11,760 --> 00:18:15,280 Speaker 4: term ends, which is typically end of June, very early July. 323 00:18:15,800 --> 00:18:20,120 Speaker 1: And amara what's next for the Fed as they await 324 00:18:20,520 --> 00:18:21,200 Speaker 1: this decision. 325 00:18:21,720 --> 00:18:23,560 Speaker 5: There's a lot going on. So we have a FED 326 00:18:23,600 --> 00:18:28,119 Speaker 5: meeting next week where Fed officials are widely expected to 327 00:18:28,160 --> 00:18:32,000 Speaker 5: hold interest rates steady after cutting three consecutive times at 328 00:18:32,040 --> 00:18:34,600 Speaker 5: the end of last year, and so FED officials are 329 00:18:34,600 --> 00:18:38,000 Speaker 5: actually dealing with a pretty complicated economic picture on top 330 00:18:38,040 --> 00:18:41,440 Speaker 5: of everything else, because they are trying to figure out 331 00:18:41,840 --> 00:18:44,360 Speaker 5: what's happening in the labor market and what's happening with inflation, 332 00:18:44,520 --> 00:18:47,080 Speaker 5: which are kind of pulling their policy choices in kind 333 00:18:47,080 --> 00:18:50,119 Speaker 5: of opposite direction. So there's a complicated economic backdrop that 334 00:18:50,119 --> 00:18:52,800 Speaker 5: they're dealing with. The other big thing that's happening is 335 00:18:52,800 --> 00:18:55,560 Speaker 5: that President Trump is weighing who he wants to pick 336 00:18:55,640 --> 00:18:58,840 Speaker 5: for FED chair chaired. Jerome Pal's term is up in May, 337 00:18:58,920 --> 00:19:03,359 Speaker 5: and President Try is considering mainly four candidates, and that 338 00:19:03,480 --> 00:19:06,520 Speaker 5: his whole selection process has been complicated by this DOJ 339 00:19:06,680 --> 00:19:10,240 Speaker 5: investigation because you now have some Republicans who are pushing 340 00:19:10,280 --> 00:19:13,680 Speaker 5: back against that and saying that they will not advance 341 00:19:13,800 --> 00:19:18,480 Speaker 5: any of President Trump's phennominees until that situation is resolved. 342 00:19:18,560 --> 00:19:21,560 Speaker 5: So there's a question of who Trump will pick to 343 00:19:21,640 --> 00:19:25,200 Speaker 5: be FED chair and how easily that person will be 344 00:19:25,280 --> 00:19:26,399 Speaker 5: able to be confirmed. 345 00:19:32,400 --> 00:19:35,520 Speaker 2: This is the Big Take from Bloomberg News. I'm Sarah Holder. 346 00:19:36,320 --> 00:19:38,840 Speaker 1: To get more from the Big Take and unlimited access 347 00:19:38,880 --> 00:19:42,600 Speaker 1: to all of Bloomberg dot com, subscribe today at bloomberg 348 00:19:42,640 --> 00:19:44,440 Speaker 1: dot com Slash Podcast offer. 349 00:19:45,000 --> 00:19:47,200 Speaker 2: Thanks for listening. We'll be back tomorrow.