The Trump Justice Department has moved to stay the prleiminary injunction barring President Trump's removal of Oxford-educated economist and Federal Reserve Governor Lisa D. Cook. Trump claims that Dr. Cook made misleading statements in a mortgage application, thus satisfying the statutory requirement that a Governor serving a statutory fourteen year term may be removed only "for cause" - 12 U.S.C. 242.
In an act unprecedented in its 112 year history President Trump acted to remove a Governor. The Fed's independence has long been understood as necessary to preserve the stability of the nation's currency and credit.
The Supreme Court's Docket has been quickly populated by "friends of the court".
Of particular note is that Cook's opposition brief is presented by the most prominent of Supreme Court advocates - former Solicitor General Paul D. Clement, White House Counsel Abbe Lowell, and former White House Ethics Counsel Norman Eisen. They argue that the Fed is special (thus avoiding the similar questions presented in the removal of FTC and other Commissioners). As Gestalt psychology emphasizes the opening has special power. Clement, et alii begin thus:
The President’s stay application asks this Court to act on an emergency basis to eviscerate the independence of the Federal Reserve Board. For decades, the Board’s insulation from direct presidential control has allowed the American markets and economy to thrive. And as the Court recognized earlier this year, the Board’s independence is uniquely entrenched in the Nation’s history and tradition. Yet the President now requests that the Court precipitously depart from that view and allow him to remove Governor Lisa D. Cook from the Federal Reserve Board “for cause” and without process based on flimsy, unproven allegations of pre-office wrongdoing—allegations conveniently timed following the President’s criticism of the Board’s policy decisions. Granting that relief would dramatically alter the status quo, ignore centuries of history, and transform the Federal Reserve into a body subservient to the President’s will.
But the key importance of a stable and independent Federal Reserve Bank is emphasized by the "Brief of amici curiae former Treasury Secretaries, Federal Reserve Board Chairs and Governors, Counsil of Economic Advisors Chairs and Economists in Opoosition to the Application to Stay the Prleiminary injunction".
The former high officials argue that "allowing the removal of Governor Lisa D. Cook while the challenge to her removal is pending would threaten [the Fed's] independence and erode public confidence in the Fed". It is difficult to imagine that a greater assemblage of authority on the matter could be assembled. The former Secretaries, et al. emphasize that our "fiat currency" - not backed by any tangible asset such as gold - is subject to abuse. Critical therefore is the stability afforded by an independent governing body serving long terms spanning more than three Presidential terms is a key element in amici's view. And of course it clashes with the "I have an Article II" impulsivity of the current occupant of the White House.
The structure of the former Secretaries, et alii argument as amici can be seen here:
I. Maintaining the Independence of the Federal Reserve Is Essential for a Healthy Economy. .................................................................................................. 6
A. An Independent Central Bank Plays a Critical Role in Ensuring the Credibility of the U.S. Dollar and thus the Proper Functioning of the Economy. ......................................................................................................... 6
B. Allowing the Political System to Set Monetary Policy Would Create a “Time Inconsistency” Problem that Would Undermine Its Ability to Achieve Its Own Goals. .............................................................................. 8
1. An Independent Central Bank Can Help with the InflationUnemployment Trade-off. ..................................................................... 10
2. Central Bank Independence Is a Protection Against the Risk of De Facto Defaulting on the Debt Through Inflation. ................................ 11
C. Academic Research Has Consistently Found that Independent Central Banks Lead to Better Economic Outcomes. ................................... 12
D. Experience in the United States and Around the World Demonstrates Both the Benefits of Increased Central Bank Independence and the Dangers of Reduced Central Bank Independence. ............................................................................................... 14
E. Maintaining the Public’s Belief in the Independence of the Federal Reserve Is Crucial to Economic Stability..................................................... 16
II. The Federal Reserve System Operates Independently from the Political Branches. .............................................................................................................. 18
III. The Court Should Deny the Application for a Stay. ........................................... 24
CONCLUSION
No comments:
Post a Comment