Supreme Court Leans Toward Retaining Federal Reserve’s Lisa Cook Amid Trump Ouster Effort
The U.S. Supreme Court appeared inclined on Wednesday to maintain Federal Reserve Governor Lisa Cook in her position, challenging former President Donald Trump’s initiative to remove her from the central bank. The case could have significant implications for the Federal Reserve’s autonomy and its influence on financial markets.
During the proceedings, justices reviewed Trump’s claims that Cook engaged in mortgage fraud—allegations she refutes. Historically, no president has dismissed a sitting governor of the Federal Reserve, an institution designed to operate independently from political pressures.
Justice Brett Kavanaugh, one of the appointees by Trump, expressed concerns that Cook’s removal could jeopardize the Federal Reserve’s independence. “Allowing Cook’s firing to go forward ‘would weaken, if not shatter, the independence of the Federal Reserve,’” Kavanaugh stated. At least five other members of the nine-justice court appeared skeptical of the bid to dismiss her.
Cook and Federal Reserve Chairman Jerome Powell attended the extensive courtroom session, as Cook declared her commitment to the central bank’s independence. “For as long as I serve at the Federal Reserve, I will uphold the principle of political independence in service to the American people,” she affirmed in a post-hearing statement.
The underlying controversy involves Trump’s alleged desire to exert control over U.S. interest rate policies, which critics argue is the real motive behind Cook’s potential ouster. Should Trump succeed, he could appoint a replacement, thereby influencing the board’s majority.
Trump has criticized concerns about rapid interest rate cuts fueling inflation, advocating for substantial reductions to lower government borrowing costs and ease financial burdens on Americans. During a recent speech in Davos, Switzerland, he urged the Fed to reduce rates dramatically, claiming the U.S. should offer “the lowest interest rate of any country in the world.”
The Federal Reserve has reduced a key interest rate three times in the last months of 2025, albeit not as swiftly as Trump desires, and indicated a potential pause due to inflation concerns.
The case currently before the court examines whether Cook can retain her position while her dismissal challenge progresses. Lower courts have thus far allowed her to remain among the seven central bank governors. Chief Justice John Roberts expressed doubt about the necessity of remanding the case to lower courts, suggesting a more definitive resolution might be preferable.
Amidst this legal battle, the Justice Department has initiated a criminal investigation into Powell, serving subpoenas to the central bank. Powell decried the charges as mere “pretexts” overshadowing Trump’s dissatisfaction with interest rates.
Historically, the Supreme Court has occasionally supported Trump’s requests to override lower-court rulings, permitting dismissals of other agency heads without proven misconduct. However, the court appears more cautious regarding the Federal Reserve, recognizing it as a “uniquely structured, quasi-private entity.”
In this instance, Trump’s team, led by Solicitor General D. John Sauer, does not claim an unrestricted right to dismiss Fed governors. The allegations against Cook, along with other public figures, involve mortgage fraud accusations by federal housing official Bill Pulte, which they all deny.
The accusations assert that Cook misrepresented two properties as primary residences in 2021, potentially securing better mortgage terms. Sauer characterizes this as “gross negligence,” but Cook’s defense, led by attorney Abbe Lowell, argues there is no evidence of fraudulent intent. Lowell contends that Cook’s disclosures about her properties have been consistent and transparent.
