'What goes around comes around': Justice Kavanaugh schools DOJ on 'real-world' consequences of Trump's Truth Social bid to fire Lisa Cook from Federal Reserve

It took a while into oral arguments on Wednesday for Justice Brett Kavanaugh to press the U.S. solicitor general on the implications of President Donald Trump's attempted firing of Federal Reserve Board governor Lisa Cook based on mortgage fraud allegations, but once he jumped in, he uttered a familiar phrase: "What goes around comes around."

Kavanaugh, who memorably said those words during his 2018 confirmation hearings after sexual misconduct allegations he denied were made against him, had already tipped his hand in December in another Trump firing case, expressing concerns about the executive branch eroding the "independence" of the U.S. central bank, which he described as "unique and distinct" in the "historical tradition."

And on Wednesday, Kavanaugh forcefully broke down the foreseeable "real-world" consequences of U.S. Solicitor General D. John Sauer's assertions that Cook was given adequate notice, through a Trump Truth Social post in August, that she was to resign or be fired "for cause," and that the courts can't review the president's "for cause" determination.

Sauer, a former Trump personal attorney, began by telling the justices the appearance of "deceit" or "gross negligence" is sufficient "cause" for Cook's firing, notwithstanding that the mortgage fraud allegations Cook denies haven't been adjudicated in a court of law, haven't been charged, and relate to alleged conduct prior to her confirmation to her office, not "malfeasance in office" — even if that conduct amounts to an "inadvertent notation" on mortgage documents listing two houses as a primary residence.

The Trump administration has said that Cook's position as Fed governor, with "sweeping" powers to set interest rates, makes the appearance of "playing fast and loose" or being "grossly negligent" in mortgage documents — or even worse allegedly lying to secure a more favorable rate for herself — enough to satisfy the "cause" for removal requirement, for legitimate reasons rather than policy differences.

"But of course, it's the sort of inadvertent notation that people could be indicted for," Sauer said.

Sauer's argument comes not long after the DOJ took aim at Fed chairman Jerome Powell and, according to Powell, issued grand jury subpoenas and "threaten[ed] a criminal indictment related to my testimony before the Senate Banking Committee last June." It also comes as the president is persistently and openly critical of the Fed for declining to lower interest rates.

In a particularly explosive exchange with Justice Ketanji Brown Jackson, before Kavanaugh weighed in, Sauer asserted that the lower court's preliminary injunction restoring Cook to her office, an office Cook never left, showed that government can show "grievous irreparable injury" — to the public's perception of the Federal Reserve.

Noting that the case is in a stay posture, with the U.S. Circuit Court of Appeals for the District of Columbia agreeing that Cook has a right to notice and an opportunity to be heard, Jackson asked Sauer to "what extent" the president or the public is "harmed" by allowing Cook to remain in her position as her lawsuit remains pending.

"I'm not sure we have evidence here that Cook is an immediate threat to the public," Jackson said.

Sauer answered that Trump made that determination.

When Jackson asked if that determination was "based on evidence," Sauer dodged and talked over Jackson.

"The Federal Reserve governor, who sets interest rates for the entire country, appears to have engaged in improper behavior," Sauer said.

"No, no, I understand. I, you're repeating — you're repeating the allegation," Jackson attempted to say, as Sauer interrupted.

That prompted Chief Justice John Roberts to step in and tell the solicitor general of the United States: "Counsel, please allow the justice" to ask her question.

"What I'm asking you is the evidence that supports that allegation. Traditionally, when an allegation is made about someone's misconduct or whatnot, there's an opportunity for that person to present evidence, for the other side to present evidence, and even if the president was the final arbiter of this, one would expect that he would do so on the basis of evidence. So what I'm trying to understand is, what is the evidence that has been presented and considered with respect to Ms. Cook's alleged misconduct?" Jackson asked, wondering if it was a Trump Truth Social post.

Sauer answered that it was the president's judicially unreviewable "for cause" determination as articulated in his order removing Cook.

"You have mortgage applications within two weeks of each other that make clearly conflicting representations," Sauer stated.

Then Jackson asked if Cook was "given the opportunity in some sort of formal proceeding to contest that evidence."

"Not a formal proceeding, she was given an opportunity in public because — " Sauer said.

"In the world? Like, she was supposed to post about it and that was the opportunity to be heard that was afforded to her in this case?" Jackson sharply followed up.

"Yes," Sauer said, "and she's had plenty of opportunities in the ensuing months where we've had ongoing litigation where there's never been a personal statement addressing that or justifying it."

This set the stage for Kavanaugh and other justices who wondered why the executive branch was moving in such a "hurried" way to oust Cook, on the strength of a criminal referral made by Federal Housing Finance Agency Director Bill Pulte alleging that Cook, prior to her confirmation, "falsified bank documents and property records to acquire more favorable loan terms, potentially committing mortgage fraud" by listing two homes as a primary residence, claims Trump then posted on Truth Social.

After all, the justices noted, a president has never removed a sitting Federal Reserve Board governor, with Roberts asking "why are we wasting our time wondering if there's cause or not" if the courts don't have the power to restore Cook to her office.

Sauer still maintained that Trump has the power to fire Cook and that decision can't be reviewed, unless there was no cause for the removal or the removal was carried out based on policy differences. Here, Trump has sufficiently established "cause," Sauer said.

Kavanaugh had the bigger picture in mind: What is the purpose of the independence of the Federal Reserve and why is that independence importance?

"Your position that there's no judicial review, no process required, no remedy available, very low bar for cause that the president alone determines, that would weaken if not shatter the independence of the Federal Reserve we just discussed," Kavanaugh warned.

Sauer disputed that it was a "low bar for cause" by saying "in a sense it's a very high bar."

"Because it does protect them from the one thing that Congress was apparently most worried about, which is a removal for policy disagreement," Sauer added.

"But it would be in the view of the president, the president who might have a policy disagreement, and there's no judicial review, and the president can just define it on his or her own," Kavanaugh countered.

Sauer stated that the high court should apply the "presumption of regularity" on the part of the president, even though this particular situation that has not happened before.

Kavanaugh responded that "if this were set as a precedent" then the "real-world downstream effects of this" — in the "big picture" of "what goes around comes around" — is "at-will removal" whenever a different party takes power.

"So, what are we doing here?" he asked. "If we accept all of these no procedure, no judicial review, no remedy, you know, that's what's going to happen, I think, and then where are we?"

"I can't predict what future presidents may or may not do," Sauer said.

Kavanaugh interjected, predicting that tit-for-tat policy disagreement firings based on the pretext of "cause" will become the norm.

"History is a pretty good guide. Once these tools are unleashed, they are used by both sides and usually more the second time around. And I think that's what, that's what we have to make sure we're — again that can't drive the decision necessarily, we have to be aware of what we're doing and the consequences of your position for the structure of the government," Kavanaugh said.

Sauer would not concede that the tool was "unleashed" by Trump.

"The president has always had this tool to remove governors for financial improprieties," he said.

Kavanaugh appeared convinced, however, that Sauer is threatening to open a Pandora's Box, even as the justice agreed there is a "balance" to strike.

"I'm not saying there's no interest on the other side here. I get that," the justice continued. "It incentivizes a president to come up with what, as the Federal Reserve former governors say, trivial, inconsequential, or old allegations that are very difficult to disprove, it incentivizes kind of the search and destroy, find something and just put that on a piece of paper, no judicial review, no process you're done. Again what are we doing when we have a system like that?"

"And again, I'm not talking about the facts of this case. I'm taking — I don't know the facts of this case," Kavanaugh said. "I'm taking no position on that."

Sauer again leaned heavily on the "presumption of regularity" to deflect this line of inquiry.

"What's the fear of more process here?" Kavanaugh wondered.

"I don't think that process is necessarily bad," Sauer replied. "Our contention is that there already has been a process. There was a social media post that said 'look, these two documents contradict each other' and the response was defiance."

Paul Clement, arguing for Cook, stated that no president in over 100 years has ever tried to remove a governor for cause, until now, and there's "simply no reason to abandon" that independence of a "uniquely structured entity" insulated from political influence by congressional design.

"There's no rational reason to go through all the trouble of creating this unique quasi-private entity that is exempt from everything from the appropriations process to the civil service laws just to give it a removal restriction that is as toothless as the president imagines," Clement said. "There is simply no reason to abandon over 100 years of central bank independence on an emergency application on a preliminary record."