WSJ What’s News - Trump’s Move to Fire Fed Governor Sets Up New Legal Test of Presidential Power

Episode Date: August 27, 2025

P.M. Edition for Aug. 27. Federal Reserve governor Lisa Cook has vowed to fight President Trump’s effort to remove her from her post—a legal challenge likely to end up in front of the Supreme Court. WSJ Supreme Court correspondent Jess Bravin talks about the legal precedents for the president’s moves, and how such a case might be decided. Plus, we have the latest on the shooting at a Catholic school in Minneapolis that left two children dead. And the FBI says that Salt Typhoon, the Beijing-linked yearslong espionage campaign, was much more extensive than investigators had previously understood. WSJ editor Aruna Viswanatha joins to discuss just how huge it really was. Alex Ossola hosts. Sign up for the WSJ's free What's News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

At least two children were killed in a shooting at a Catholic school in Minneapolis. Plus, President Trump's attempt to fire Federal Reserve Governor Lisa Cook is setting up a new legal test of presidential power. This is going to be a tough one for the Supreme Court. If it says, for example, that, well, the difference here is that the president asserted there was cause to remove Lisa Cook. Then the question is, well, what does it take to establish that? cause? Is it just the president's opinion? And how a Beijing linked espionage campaign was much more extensive than initially understood. It's Wednesday, August 27th. I'm Alex O'Sullough for the Wall Street Journal. This is the PM edition of What's News, the top headlines

and business stories that move the world today. We begin this evening with the latest on the shooting at the Annunciation Catholic School in Minneapolis. The attack has left two children dead and 17 other people injured, 14 of whom are children. Two of the injured children are in critical condition. The shooting took place just before 8.30 a.m. local time during a mass that marked the first week of the school year. In a news conference, Minneapolis Police Chief Brian O'Hara described the attack. Shooting through the windows, he struck children and worshippers that were inside the building. The shooter was armed with a rifle, a shotgun, and a pistol.

This was a deliberate act of violence against innocent children and other people worshipping. The sheer cruelty and cowardice of firing into a church full of children is absolutely incomprehensible. FBI director Cash Patel said that the shooter was identified as Robin Westman, born as Robert Westman. He added that the shooting was being investigated as an act of domestic terrorism and as a hate crime against Catholics. President Trump said that the U.S. flag will be flown at half staff at the White House until Saturday night as a mark of respect for the victims. Today, the FBI said that a Beijing linked years-long espionage campaign that hit U.S. telecom companies and swept up Donald Trump's phone calls was much broader and more

extensive than investigators initially understood. The journal had reported last year that the Salt Typhoon campaign dates back to at least 2019 and allowed spies to access U.S. customer call data, private communications for a limited number of individuals, sensitive law enforcement information and technical network information that could inform future attacks. Aruna Vishwanatha is an editor for WSJ and is here now with more. Aruna, what is new here? How much more extensive is this hack than investigators initially thought? Towards the end of last year, there was a flurry of revelations. If you remember Donald Trump's phone, they collected some information about his phone, about some Democrats, like all these telecom companies were hit. But then it's been pretty

quiet. This was the first big substantive update we got in more than six months about what investigators were finding. And it was pretty extensive. It hit companies potentially in 80 different countries. They've contacted 600 different companies that they think either were targeted or somehow affected as part of this breach. So the campaign was just so much wider than they had realized and that it gave these spies potentially huge amounts of access to the global movements of some of these high value targets in a way that they didn't quite appreciate. You're using the past tense here, but do we know for sure that this hack is done? What FBI officials say is that they think they are pretty well contained. So what that means is not necessarily that they've kicked everyone out of

every system that they were in, but that they think they've done a decent enough job at identifying them that even if some of these actors are still in certain systems, they're dormant. And as soon as they start trying to do something, they will spot them and be able to kick them out. What has Beijing said about this? China has denied involvement in this campaign. They've asked the United States for evidence. They said that they don't find the evidence 100% credible. So they have completely denied involvement. That was WSJ editor, Aruna Vishwanatha. Thanks, Aruna. Thank you. Investor's expectations for blowout results from NVIDIA, the world's most valuable company,

helped lift the S&P 500 to another record close. Major U.S. indexes ended higher. The Dow was up about 0.3%. The S&P 500 rose about 0.2%. And the NASDAQ also added roughly 0.2%. And reporting after the bell, NVIDIA set fresh sales records for the second quarter as it continued to capitalize on strong demand for AI computing power and shrugged off uncertainty surrounding its business in China. Sales in the July quarter hit $46.7 billion, up 56% from the year earlier period and roughly in line. with analyst estimates. Revenue from the important data center segment, which includes sales of the company's most powerful chips, also rose 56 percent to $41.1 billion, but came in slightly lower than analyst expectations. As we mentioned in yesterday's show, favorable weather

conditions in the U.S. Midwest have helped corn crops thrive this season, but the weather may not be so kind to producers of meat and dairy. Droughts have hit countries around the globe. Worries about increasingly high temperatures have investors wondering how farming businesses are dealing with water shortages. A report out this week from the Global Investor Network Farm Animal Investment Risk and Return Initiative found a lack of information about how large global meat and dairy producers plan to secure their water supply. I'm joined now by reporter Clara Hudson, who covers sustainability for WSJ Pro. Clara, how significant is drought risk for the meat and dairy industry? It's extremely significant. We've all been dealing with heat waves and droughts in the U.S. and across the globe.

Because of that, access to water has become a much bigger concern for investors that are closely watching the agriculture industry. So farms have to make sure that they're planning to get the water they need for animals to drink, as well as to cool them off when it's really hot. And so for the producers of meat and dairy, what are they doing? doing to manage this risk? There are ways for farmers to better manage their water use. But ultimately, the meat and dairy industry aren't doing enough to manage water risk right now. And the report is also emphasizing that water isn't just an environmental concern, but it's also a really significant financial concern. And that's why investors are really pressing to get more

transparency and more details about how companies are trying to navigate this. That was WSJ reporter, Clara Hudson. Thanks, Clara. Thank you. Coming up, could Trump's attempt to fire a Fed governor cross a red line for the Supreme Court? More on that after the break. As President Trump, Trump, seeks to fire Federal Reserve Governor Lisa Cook. He is pushing his drive for unilateral control

of the U.S. government to new levels. In a letter published on social media on Monday, Trump told Cook that unproven allegations of mortgage fraud were sufficient cause for dismissal. Cook, a Biden administration appointee, has vowed to fight Trump's action. Her lawyer said she would file suit, setting up a case likely to reach the Supreme Court that would test the limits of presidential power. I'm joined now by WSJ Supreme Court. correspondent Jess Braven. Jess Cook has not been charged with a civil or criminal violation. So does Trump have the authority to throw her out of her post? The very clear answer is, we don't know. The Federal Reserve Act passed in 1913 says that the

president can only remove Fed governors for cause before their terms expire, and their terms are 14 years. But in recent decades, conservatives have questioned whether it is constitutional to have independent agencies, or at least federal officers who can't be removed at the pleasure of the president. And they argue that infringes on the president's power to run the executive branch. So although the Supreme Court upheld Congress's ability to establish these independent agencies and put these tenure protections on some commissioners and board members, in fact, that was upheld in 1935. The Supreme Court today is skeptical of that theory and has signaled that it is willing to revisit it. Earlier this year, after Trump removed several members of boards who

had these tenure protections, members of the National Labor Relations Board and the Consumer Product Safety Commission, lower courts reinstated them under this old precedent, but the Supreme Court granted Trump's emergency request to fire them, at least until the litigation is ultimately resolved. And that was sending a very strong signal that they are getting ready to remove those tenure protections. But they included a very interesting signal in their unsigned order. And the signal was the Federal Reserve may be different because of its own distinct history. And so the majority suggested that maybe Fed governors are different. Now, it didn't provide a lot of justification for that distinction. And the dissenters, led by Justice Elena Kagan, said there wasn't any other than the

majority's apparent fear that letting the president mess with the Federal Reserve was much more consequential than letting him switch the members of the Consumer Product Safety Commission. Anyway, now we're going to find out what that really means. Bill Pulte, a Trump appointee who leads the federal housing finance agency, publicized the mortgage allegations and referred them to the Justice Department. Would that count as cause for removing Cook? The president in the letter he posted on social media, he said there was cause. The cause was an alleged mortgage fraud that Lisa Cook, a Biden appointee, committed before she was appointed to the Fed board and before she was confirmed by the Senate.

Those are allegations that were dug up by his own administration, but she hasn't been charged with a crime. She hasn't been convicted of a crime because typically when people are accused of wrongdoing in the United States, there is a formal process where they get to respond and their side of the story. and a neutral party is supposed to decide whether they are responsible or not and what the penalty should or should not be. So here if someone who's not been convicted of a crime or charged with a crime, and she's accused, not by the Department of Justice, incidentally, but by a federal housing official appointed by President Trump. What legal options does Cook have to challenge Trump's decision to remove her from her post? She can sue, which she has pledged to do, arguing that the president exceeds. his authority that he needs to have cause to remove her. He hasn't provided cause, and he has not provided her an opportunity to respond to any allegations. There's very little

precedent on this question about whether the president has a constitutional power to remove officials without cause. There haven't been that many times that the president has done it. The first time was in 1912 when President William Howard Taft removed two members of a now-defunct federal regulatory board. But he didn't do it the way that Trump did it. In 1969, President Richard Nixon removed the administrator of Fannie Mae, who had been left over from the Lyndon Johnson administration, for cause, President Nixon said in a letter. He didn't say what that cause exactly was, but the administrator did not pursue a lawsuit. So we don't have any precedent on what counts as cause, and even if she did do this, is that the kind of cause that's contemplated? And we basically don't know.

Jess Braven covers the Supreme Court for the journal. Thanks, Jess. then. And that's what's news for this Wednesday afternoon. Today's show was produced by Pierre Bienname and Anthony Bansy with supervising producer Michael Cosmides. I'm Alex Osloff for the Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.