U.S. Supreme Court to Hear Trump’s Bid to Remove Fed Governor Cook; She Remains in Office for Now

The U.S. Supreme Court said on Wednesday that it will hear arguments in January on former President Donald Trump’s attempt to remove Federal Reserve Governor Lisa Cook — a move that keeps her in office for now and sets the stage for a landmark legal battle over the central bank’s independence.

The justices declined to immediately grant the Justice Department’s request to lift a lower court order temporarily blocking Trump from removing Cook, who was appointed by former Democratic President Joe Biden. Instead, the Court postponed a decision until after oral arguments.

When Congress created the Fed in 1913 under the Federal Reserve Act, it sought to shield the central bank from political interference by stipulating that governors could only be removed by the president “for cause.” However, the law does not define the term or lay out a removal process, and the provision has never been tested in court.

On September 9, U.S. District Judge Jia Cobb in Washington ruled that Trump’s claim—that Cook engaged in mortgage fraud before taking office, an allegation she has denied—was unlikely to constitute sufficient grounds for removal under the statute. Cook, the first Black woman to serve as a Fed governor, sued Trump in August after he announced plans to dismiss her, arguing that the allegations were a pretext to oust her over her stance on monetary policy.

A divided D.C. Circuit Court of Appeals later refused the administration’s request to block Judge Cobb’s order, leaving Cook in place pending further review.

The case comes as the Supreme Court, which holds a 6-3 conservative majority, has recently sided with Trump in several disputes involving the president’s authority to remove members of independent agencies. Legal observers say the Court could be preparing to overturn a 1935 precedent upholding protections for Federal Trade Commission members. Still, the justices have signaled they may view the Fed differently, calling it in a separate case this year a “uniquely structured, quasi-private institution with a distinct historical tradition.”

The Justice Department, in a September 18 filing, argued that as long as the president cites a reason, removal falls within her “undefinable discretion.” Trump’s lawyers countered that allowing his move would upend decades of Federal Reserve independence, roil financial markets, and give future presidents license to steer monetary policy for political gain.

Eighteen former senior economic officials — including three former Fed Chairs Janet Yellen, Ben Bernanke, and Alan Greenspan — urged the Court not to permit Cook’s dismissal, warning it would undermine confidence in the central bank.

Cook participated in the Fed’s two-day policy meeting in September, voting in favor of a quarter-point rate cut amid concerns over a weakening labor market.

The outcome of the case could have sweeping implications for the Fed’s ability to set interest rates independently of the White House, a cornerstone of central bank credibility worldwide. Trump, who has demanded steep rate cuts since taking office and derided Fed Chair Jerome Powell as “incompetent” and “stubborn,” has sought to exert greater control over monetary policy.

Cook’s 14-year term was set to run through 2038. For now, she remains on the Fed’s board, after lower courts found that Trump’s removal order likely violated both the Federal Reserve Act — which permits removal only for misconduct while in office — and her Fifth Amendment due process rights.