U.S. Supreme Court justices expressed doubts during oral arguments about President Donald Trump's attempt to remove Federal Reserve Governor Lisa Cook over unproven mortgage fraud allegations. The case highlights tensions over the central bank's independence from political interference. A ruling is expected by June.
On January 21, conservative and liberal justices alike signaled reluctance to allow President Donald Trump to immediately fire Federal Reserve Governor Lisa Cook, whose legal challenge has kept her in her role since lower courts blocked the removal.
The dispute stems from Trump's August 25 social media post announcing Cook's termination, citing mortgage fraud allegations disclosed by Federal Housing Finance Agency Director Bill Pulte. Cook, appointed in 2022 by former President Joe Biden as the first Black woman in the post, denies the claims, calling them a pretext amid Trump's pressure on the Fed to cut interest rates faster. Her term extends to 2038, and she helps set monetary policy with the seven-member board and 12 regional bank heads.
During two hours of arguments in Trump v. Cook, Solicitor General D. John Sauer argued the allegations—listing two properties as principal residences—show "deceit or gross negligence" warranting removal for cause under the Federal Reserve Act, which insulates governors from politics but undefined "for cause." Sauer said, "The American people should not have their interest rates determined by someone who was, at best, grossly negligent."
Cook's attorney, Paul Clement, described it as "at most an inadvertent mistake" on a vacation property application, predating her Fed service. U.S. District Judge Jia Cobb ruled in September that the firing violated due process under the Fifth Amendment and lacked sufficient cause; the D.C. Circuit denied a stay.
Justices raised concerns about process and impacts. Chief Justice John Roberts questioned if an "inadvertent mistake" sufficed, telling Sauer, "we can debate that." Justice Brett Kavanaugh warned Trump's position would "weaken, if not shatter, the independence of the Federal Reserve," noting future presidents could retaliate: "What goes around comes around." Justice Amy Coney Barrett cited amicus briefs predicting a recession from the firing and asked about public interest risks. Justice Samuel Alito noted the administration's "cursory manner" and unexamined facts, saying, "There’s a million hard questions."
Cook, attending the arguments, stated afterward: "This case is about whether the Federal Reserve will set key interest rates guided by evidence and independent judgment or will succumb to political pressure." This marks the first presidential attempt to oust a Fed official since 1913, amid the Court's recent erosion of agency independence but recognition of the Fed's unique status.
The 6-3 conservative majority heard the case in October, keeping Cook in place. Sauer downplayed economic fears, noting August notification had no market effect.
