Fed official Lisa Cook finds humor lacking in Trump's ability to dismiss her at will for any reason

In a recent turn of events, President Donald Trump has fired Lisa Cook, a Federal Reserve governor, citing an alleged mortgage infraction as the reason. However, some argue that this could be a pretextual reason, given the independent status of the Federal Reserve.

The Federal Reserve, like the Consumer Financial Protection Bureau (CFPB), exercises executive power through its vast regulatory functions, including promulgating rules, policing banks, and issuing fines. Unlike the CFPB, however, the Federal Reserve is not subject to the same removal restrictions. The term "cause" in the statute, which dictates when a Federal Reserve governor can be fired, is a broad term and could potentially include a refusal to carry out a presidential directive or policy disagreements.

The rise of independent agencies with the New Deal and the Supreme Court decision in Humphrey's Executor sent the removal power into retreat. However, recent Supreme Court decisions, including the one in the CFPB case, have undercut the logic of Humphrey's Executor, vindicating the president's power to fire at will officials whose agencies carry out executive functions.

Justice Clarence Thomas wrote in a concurrence in the CFPB case that there isn't enough justification for the numerous independent agencies that exercise executive power outside the constitutional structure. He argued that if an agency exercises executive power only in a fraction of its functions, it is subject to the president's removal power.

The Federal Reserve, despite its independent status, is a constitutional anomaly as it exercises executive authority without being subject to the same rules as the rest of the executive branch. This has led to a debate about the best course of action.

The cleanest solution would be to pass a constitutional amendment authorizing an independent Fed or a similar entity. Short of a constitutional amendment, the Federal Reserve's regulatory functions could be handed over to another executive agency. The Supreme Court held in 2020 that such a constraint was unconstitutional, but this decision did not directly address the status of the Federal Reserve in its removal-power jurisprudence.

Lisa Cook is suing to keep her job, citing that she cannot be fired. Jerome Powell, the chairman of the Federal Reserve, has maintained that he cannot be removed from his position. Given the legal merits, some experts suggest that Cook should be sending out her resume.

The Federal Constitutional Court of Germany (Bundesverfassungsgericht) in 2020 ruled that the restriction on the removal possibility of an official of the consumer protection authority is incompatible with the constitution, indicating a growing global trend towards reining in the power of independent agencies.

As the debate continues, it is clear that the removal of Federal Reserve governors is a complex issue, intertwined with constitutional questions and the balance of power between the executive and independent agencies.