Inconsistencies and Downstream Effects in the Court’s Approaches to Slaughter and Cook, by Graham Steele
•February 19, 2026
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Why It Matters
The rulings will determine whether key financial regulators remain insulated from partisan control, directly affecting market stability and the credibility of U.S. monetary policy.
Key Takeaways
- •Court may limit Fed exception, threatening agency independence
- •Removal protections for Fed contrast with other agencies' at‑will rules
- •Political pressure on Fed governors intensifies under Trump administration
- •Overruling Humphrey’s Executor could erode financial regulatory stability
- •Partisan control risks systemic financial market instability
Pulse Analysis
The Supreme Court’s upcoming judgments in *Slaughter* and *Cook* spotlight a rare judicial foray into the architecture of the United States’ financial regulatory system. While *Cook* reaffirmed the Federal Reserve’s distinct status as a quasi‑private entity shielded from at‑will removal, *Slaughter* threatens to dismantle the long‑standing *Humphrey’s Executor* doctrine that safeguards agency heads from political ouster. This bifurcated approach raises questions about the consistency of the Court’s jurisprudence and its willingness to carve out exceptions for the Fed while exposing other regulators to heightened executive influence.
Beyond doctrinal debates, the cases unfold against a backdrop of intensified political pressure on the Fed. Recent history shows presidents leveraging vacancies and nominee confirmations to reshape the Board, while congressional actions have increasingly blurred the line between oversight and interference. The Solicitor General’s arguments and Justice Kavanaugh’s warnings underscore a real‑world risk: presidents could use removal powers as a tool to steer monetary policy or punish dissent, eroding the institutional independence that underpins credible inflation targeting and crisis response.
The broader market implications are stark. If the Court curtails the Fed’s protective shield or extends at‑will removal to other financial agencies, the resulting partisan volatility could destabilize credit markets, amplify systemic risk, and undermine investor confidence. Such a shift would echo past episodes where politicized regulation contributed to financial turbulence, suggesting that the Court’s decisions will reverberate far beyond legal theory, shaping the resilience of the U.S. financial system for years to come.
Inconsistencies and Downstream Effects in the Court’s Approaches to Slaughter and Cook, by Graham Steele
There is a great deal at stake for the financial system and the economy in the outcomes of two cases before the Supreme Court, Trump v. Slaughter and Trump v. Cook. As I argued in a previous post, however, the Court’s arguments in both cases spoke only obliquely to the present reality of what is happening to administrative agencies at the hands of the President, Congress, and the courts. In that post, I examined recent trends at financial regulatory agencies and what they might portend for the broader future of the administrative state. This post seeks to further illuminate this picture by examining the recent legal and political experiences of the financial regulatory agencies and the tensions the Court will have to navigate when deciding Slaughter and Cook.
In this post, I will contrast the Court’s attentiveness to real-world context in Slaughter, which deals with regulation generally, and Cook, which deals with financial markets specifically. The Justices are at times capable of signaling their awareness of real-world events, but mostly when the Fed is involved. Ironically, what the Court gives by upholding removal protections for the Fed in Cook, it could ultimately take away by overturning Humphrey’s Executor v. United States in Slaughter, by undermining agencies’ ability to administer the laws that protect the financial system. Notwithstanding the exception the Court fashions for the Fed, this outcome implicates the same types of policy-based concerns raised by Fed independence. The point here is not that finance is necessarily deserving of its own special set of rules. Instead, by “blinding itself,” in the words of Justice Elena Kagan, to the practical realities of the ways all three branches of government are diminishing the powers of financial regulators, the Court’s Fed exception is likely to fail by its own terms.
The Court’s Fed Exception—Robust in Theory but Tenuous in Practice
In Seila Law v. CFPB, the Court framed the removal power as central to robust financial regulation. Without at-will removal, a President could be “saddled with a holdover agency official from a competing political party who is dead set against their agenda.” The Fed is the one exception to this rule. In its short, unsigned order in Trump v. Wilcox, which has been consolidated with Slaughter, the Court distinguished the Fed’s removal protections from those of other administrative agencies, owing to the central bank’s status as a “uniquely structured, quasi-private entity” that follows in the historical tradition of the First and Second Banks of the United States. If the Court hopes to carve out the Fed as the one multi-member commission immune from political influence, the President and Congress seem not to have gotten the message.
Notwithstanding the Court’s attempts to insulate the central bank from political interference, and the longstanding norm that central banking should be insulated from partisan politics, the Fed has not been immune to either congressional or presidential meddling in recent years. As discussed in the last post, during the Obama Administration, the Republican Chairman of the Senate Banking Committee instituted an informal blockade of President Obama’s financial regulatory nominees. This included two nominees to the Fed’s Board of Governors—one a respected economist, the other a banking industry veteran—who never received so much as a committee hearing or vote.
The blockade thus allowed President Donald Trump to use preexisting vacancies to reshape the composition of the Fed board during his first term and set new precedents about eligibility for the Board. Three of his appointees remain on the Board today and he has nominated a new Fed Chair to replace Jerome Powell.[1](#_edn1) Meanwhile, the Senate confirmed Stephen Miran to the Board of Governors last Fall, despite Miran’s decision to remain on unpaid leave from his role as Chairman of the President’s Council of Economic Advisors while he serves his term on the Board.[2](#_edn2) (Miran subsequently resigned from his White House position after his Fed term expired, but is remaining on the Board.)
The Solicitor General said during the Slaughter argument that, consistent with Wilcox, “issues of removal restrictions as a member of the Federal Reserve would raise their own set of unique distinct issues” and the administration has “not challenged those either in this case or any other case, and so it’s not before the court.” But, even after the Court’s order in Wilcox, the President continued pressuring the Fed to change its course on monetary policy by criticizing the cost overruns from its building renovation project. He then attempted to remove Governor Lisa Cook using specious accusations of mortgage fraud. Two weeks before the Cook oral argument, the U.S. Attorney’s Office in Washington, D.C., subpoenaed the Fed as part of an investigation into Chair Jerome Powell’s testimony regarding the renovation costs.
During the Cook argument, Justice Kavanaugh posited that, were the Court to accept the Solicitor General’s arguments about presidential removal of Fed Governors, the “current president’s appointees would likely be removed for cause on January 20th, 2029, if there’s a Democratic President or January 20th, 2033, and then we’re really at at-will removal.” Creating such a system would, he suggested, incentivize a President to “search and destroy and find something and just put that on a piece of paper, no judicial review, no process, nothing, you’re done.” “Once these tools are unleashed,” he continued, “they are used by both sides and usually more the second time around.” Allowing this state of affairs to continue would “weaken, if not shatter, the independence of the Federal Reserve.”
Justice Kavanaugh went to great pains to clarify—at least three separate times—that he was “not talking about the facts of this case.” The irony should not be lost on anyone currently watching the President’s machinations around the Fed. The risk Justice Kavanaugh identified is not from a hypothetical future President; it is happening now. The President is, according to most reasonable observers, attempting to manufacture pretextual justifications to remove Fed Governors—or even the Fed Chair—in an effort to influence the Fed Board’s composition and substantive policies. Such efforts may well be successful, given the apparent limits of Congress’s interest in safeguarding the Fed’s political independence—at least when it conflicts with the prerogatives of a President from their own party.
These precedents are now on the books, available for use by future Presidents looking to exert more influence over central banking. This context clouds the future of central bank independence, notwithstanding the Supreme Court’s special, and vague, exception and the outcome of the Cook case.
The Risks of Expanding Partisan Control Over Finance
In Cook, Justice Amy Coney Barrett expressed her desire not to be in the “business of predicting exactly what the financial market’s going to do” in response to the Court’s decision. Others, like Justice Brett Kavanaugh, seemed focused on the stakes, speculating about the “real-world downstream effects” of granting the President broad discretion to remove Fed Governors.
Again, the present moment is instructive in imagining how the financial markets might change. The Trump Administration is pursuing a policy agenda of what I call “financial subordination.” They are engaged in financial deregulation, ostensibly to promote economic growth but accompanied by financial risks. They are dismantling the CFPB, the agency responsible for protecting consumers from predatory financial products. Eschewing independent expertise, the financial agencies have become more solicitous of the President’s personal priorities and grievances—from his frustrations over alleged “de-banking” following the January 6 insurrection to his promotion of the cryptocurrency industry as a result of his family’s cryptocurrency businesses. In doing so, agencies have frequently bypassed the traditional notice-and-comment rulemaking process, making policy changes through interpretive guidance or unilaterally repealing previous guidance without seeking comment from the public.
As Justice Ketanji Brown Jackson observed during the Slaughter argument, agency independence is in part about “eliminating political influence because we’re trying to get to science and data and actual facts related to how these decisions are made.” The risk, she said, if “everybody can just be removed when a new President comes in, is that we’re going to get away from those very important policy considerations.” Justice Barrett was largely unmoved by practical considerations in Slaughter, but in Cook she noted the warning from some amici that allowing at-will removal of Fed Governors “could trigger a recession.” That is, financial agencies may feel pressure to subordinate sound risk management to accommodate policies that try to solve broader economic problems through more borrowing. Further, access to the U.S. banking system has been a locus of economic, racial, and social policy throughout our nation’s history. Without it, individuals, businesses, and communities are unable to fully participate in the economy. Congress meant to push against these dynamics by providing a mix of regulatory independence with political oversight.
In Cook, many of the Justices spoke deferentially about Congress’s determination that the Fed should be structurally protected from certain kinds of partisan influence due to the Fed’s important role stewarding the financial system. These concerns are equally applicable to various functions of other financial regulatory agencies. Even in the case of the Fed, some monetary policy functions could be insulated by the Court’s decision in Cook, but regulatory independence could still be functionally eroded by other means.
And yet, some Justices seem unconcerned by the likelihood that such an outcome could result from making the heads of other financial agencies removable at will in Slaughter. This is the central paradox of the Court’s sui generis treatment of the Fed. Some Justices seem to believe that decisions of economic stewardship are so important that they must, by and large, be subject to partisan control. At the same time, they also hold the position that the Fed’s functions are too important to be left to partisan control.
This is more than just a logical contradiction. It will have substantive implications. Post-Slaughter, financial regulation will likely continue the trend of increasingly partisan—not just political—regulation that can be used to preference Presidents’ political allies and punish their enemies. The resulting weakening of financial agencies’ structural independence and regulatory powers will increase risks to the safety, soundness, and stability of the financial system in ways that are analogous to politicizing the Fed’s monetary policy. This will undermine the goals the bespoke Fed exception is ostensibly meant to preserve. In these senses, the Court’s jurisprudence is its own potential source of systemic financial risk.
Graham Steele is an academic fellow at the Rock Center for Corporate Governance at Stanford Law School and a senior fellow at the Roosevelt Institute. From 2021-2024 he served as the Assistant Secretary for Financial Institutions at the U.S. Treasury Department, and from 2015-2017 he served as the Minority Chief Counsel for the U.S. Senate Committee on Banking, Housing, and Urban Affairs.
[1](#_ednref1) Not all of President Trump’s nominees were successful. Two, Marvin Goodfriend and Stephen Moore, withdrew from consideration (Goodfriend passed away shortly thereafter). Judy Shelton was never confirmed. And a fourth, former Republican presidential candidate Herman Cain, was floated but never formally nominated (Cain subsequently passed away due to complications from COVID-19).
[2](#_ednref2) While the move is pretty clearly counter to the spirit of section 10 of the Federal Reserve Act, which states that members of the Fed’s Board of Governors “shall devote their entire time to the business of the Board,” the provision does not on its face prohibit an arrangement like Miran’s. As with many other precedents in the Trump era, the idea that a Fed governor should not simultaneously draw their paycheck from the White House appears to be more of a norm to be enforced through the political process—namely the Senate confirmation process—than a hard-and-fast legal requirement.
The post Inconsistencies and Downstream Effects in the Court’s Approaches to <i>Slaughter</i> and <i>Cook</i>, by Graham Steele appeared first on Yale Journal on Regulation.
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