The legal landscape in deciding when presidents can fire Fed governors is surprisingly unsettled.

I n firing Lisa Cook from her position on the Federal Reserve Board of Governors on the grounds that she allegedly filed false documents in taking out a personal mortgage, Donald Trump is on surprisingly unsettled legal turf.

Now, as Andy McCarthy has discussed in greater detail, it’s important to note what is not happening here. The big ongoing fight over the president’s power to remove executive-branch officials is on the constitutional question of whether Congress, by statute, can insulate executive officials (such as the leadership of “independent” agencies) from being fired at will by the president. The Supreme Court, since Humphrey’s Executor v. United States (1935), has allowed Congress to limit the president’s removal power and thus effectively create a fourth branch of government. The current Court has signaled, in a series of emergency orders overturning district court injunctions against Trump’s firing people, that it intends to overturn Humphrey’s Executor — except as it applies to the Fed.

That’s not a legally principled distinction, but so long as the Court is willing to hand Trump a monumental win long sought by legal conservatives, Trump and his lawyers are shrewd enough to take nine-tenths of a loaf and not press their luck. There’s also only one power in America that Trump truly fears to offend, and that’s the financial markets. They would react badly to any presidential assertion of direct control over the Fed.

For What Cause?

Instead of challenging the limits on his power to fire governors of the Fed, Trump is trying to work within them. The law provides that the governors serve for a fixed term of years “unless sooner removed for cause by the President.” While the term of years has changed over time (it’s now a 14-year term), the “for cause” language has been unchanged in the statute since it was enacted in the Federal Reserve Act of 1913 (the centerpiece of Woodrow Wilson’s legislative agenda) and is now codified at 12 U.S.C. Section 242.

But what does “removed for cause by the President” mean? Can the president fire Cook for malfeasance in her personal finances, or can he fire her only for causes directly related to her job performance? Can he make his own decision based on the evidence, or would she need to first be convicted of a crime or found liable in a civil court? Does it matter that the president’s real reason for firing her is to bend the Fed to cut interest rates, or is it enough if the president cites a cause that stands on its own merits? And who gets to decide whether the president had cause or not?

You might expect that “for cause” would be the kind of standard that is well defined in the law. Variations on the phrase are used in many federal and state laws and commercial contracts. There are huge numbers of judicial decisions on different types of for-cause provisions in employment contracts and collective bargaining agreements. But no court has ever actually ruled on what amounts to cause for a president to remove an executive branch official.

For-cause removal restrictions have a long history. The Constitution, for example, allows presidents and other executive branch officials to be removed for “Treason, Bribery, or other high Crimes and Misdemeanors,” and ensures that judges “shall hold their Offices during good Behaviour,” but the courts have left to Congress in the impeachment process the task of defining what is and isn’t an impeachable offense. The answer has often been defined more by politics than law.

One of the earliest for-cause provisions in an administrative agency statute was written in 1887, protecting commissioners of the Interstate Commerce Commission from removal for “inefficiency, neglect of duty, or malfeasance in office.” A number of later-enacted statutes, such as those establishing the National Labor Relations Board and the Consumer Product Safety Commission, say that officials may be removed “for neglect of duty or malfeasance in office, but for no other cause (emphasis added).”

The challenges for a court trying to define “for cause” should become apparent. First, when Congress uses different language in different statutes, courts assume that Congress meant something different. So, while the tendency to equate “for cause” dismissals with malfeasance or neglect of duty in office might be an implied term of this statute, it could just as easily be argued that Congress here didn’t limit the causes a president could cite. After all, the Fed exercises extraordinarily broad powers over the economy; might Congress in 1913 have preferred that presidents be able to remove governors who engage in financial malfeasance?

Second, many of the other comparable statutes were written later — often, decades later. That may cut against importing their assumptions into the Federal Reserve Act — or, it could cut against the presumption that distinct language was intended to mean a different rule.

By What Process?

Cook hasn’t been charged with a crime. But for-cause termination clauses are rarely read to require that some other decision-maker rule first — unless the rule says so explicitly. The NLRB’s statute, for example, mandates that commissioners can be removed only “upon notice and hearing.”

Some legal scholars have argued that for-cause removal is a political question that the courts simply can’t adjudicate — like impeachment. But impeachment is a process specifically committed to Congress by the Constitution. If Congress has the power to define the limits of a president’s power to fire people, there’s no obvious reason why the courts can’t interpret the law written by Congress and determine the president’s compliance with that law in a suit brought by the terminated official.

On the other hand, the Roberts Court has been particularly hesitant to wade into questions of executive motivation if there is any way to avoid those questions. So, it seems likely that if this case reaches the Court, it will confine its analysis to whether Trump’s stated basis for firing Cook is within the four corners of the statute, and perhaps to examining whether Trump has some basis to support his “cause” (i.e., that Cook really did make misrepresentations in seeking a mortgage). The Court is unlikely to want to wade into asking what Trump’s real reasons are, so long as he’s acting within his real powers.

Finally, as we’ve seen, the Court is out of patience with district courts preliminarily enjoining Trump from firing people. That means that the case could play out a while before there’s any sort of remedy for Cook. What creates another level of complexity is what happens if the Senate confirms a replacement before the courts can even decide if Cook was legally fired or not.

Trump thinks in terms of power, not rules. But a system of rules still needs to decide when he’s within the lines, and when he’s not. He’s setting the courts a bunch of puzzles that they could be wrestling with for a while.