Supreme Court blocks Trump's firing of Federal Reserve governor, notes 'tradition of central banking protected from political interference'
The US Supreme Court on Monday ruled in a 5-4 decision that Federal Reserve Governor Lisa Cook can continue serving on the Board of Governors after President Trump fired her last year.
Trump fired Cook, the first Black woman to serve as a Fed governor, last August, claiming she committed mortgage fraud by making misrepresentations on loan documents. Cook, a Biden appointee, has denied any wrongdoing and sued.
The technical matter before the court was whether Cook should be allowed to remain in her position while her lawsuit against Trump moves forward.
“The Court rejects the Government’s halfhearted contention that Cook in fact received due process. At minimum, Cook was entitled to some explanation of the evidence at issue, some avenue for a response,” the opinion said.
The majority opinion was written by Chief Justice John Roberts and joined by the court’s three liberal justices — Sonya Sotomayor, Elena Kagan, Ketanji Brown Jackson — as well as Trump appointee Brett Kavanaugh.
The ruling is the most definitive defense yet of Federal Reserve independence. In a separate case on Monday, the Supreme Court held that the president has wide power to remove other independent regulatory heads. But it effectively said the Fed is different.
Section 10 of the Federal Reserve Act states that each member of the board shall hold office for 14 years unless sooner removed for cause by the president. The statute does not detail what constitutes “for cause.” That term has been interpreted in legal rulings to mean inefficiency, neglect of duty, or malfeasance. Those terms were dissected in numerous instances during oral arguments in January.
On the statutory question of whether the president can remove a member of the Federal Reserve for alleged wrongdoing before she came to office and without providing her an opportunity to respond, the justices wrote that to accept any one of the Trump administration’s arguments “would in effect transform the Federal Reserve’s for-cause protection into at-will employment—an interpretive leap out of step with the statute Congress enacted and our Nation’s tradition of central banking protected from political interference.”
The justices said that whether a governor should be “removed for cause” is a decision only the president can make, but that does not mean he may make it for any reason, or no reason. Any definition of “cause” in this context must reflect the Fed’s unique historical status and role.
“Not only the fact of independence but also the appearance of independence is key to the Federal Reserve’s design. That counsels a substantial threshold for ’cause,'” the justices wrote.
Cook released a statement shortly after the decision was announced.
“This was never about mortgage documents signed years before I became a Federal Reserve governor. It was an attempt to remove me on a manufactured pretext because I refused to bow to political pressure and continued to set interest rates based only on what would best serve the American people,” Cook said in a statement.
“Today’s ruling affirms a principle that has underpinned sound economic stewardship for generations: that the Federal Reserve must make all its policy decisions guided by evidence and independent judgment, free from political interference.”
The White House did not immediately respond to a request for comment.
During oral arguments in January, the justices reacted skeptically to the Trump administration’s arguments for firing Cook, cautioning that the case carried implications not just for the central bank and its independence but also for government appointees more broadly.
Kavanaugh, who joined the court during Trump’s first term, said in January that “a low bar ‘for cause’ would weaken if not shatter independence of the Fed.”
In a concurring opinion Monday, Kavanaugh wrote, “the Federal Reserve occupies a unique role in the U. S. Government and maintains critical responsibility for the stability and success of the U. S. and world economies.”
This is a breaking news update.
Jennifer Schonberger is a veteran financial journalist covering the Federal Reserve, Congress, the White House, the Treasury, the SEC, the economy, cryptocurrencies, and the intersection of Washington policy with finance. Follow her on X @Jenniferisms and on Instagram.