Federal Reserve Governor Lisa Cook leaves the U.S. Supreme Court on January 21, 2026, in Washington, D.C., after the court heard oral arguments in Trump v. Cook. (Photo: Kevin Dietsch/Getty Images)
WASHINGTON — U.S. Supreme Court justices across the political spectrum showed skepticism of President Donald Trump’s quick, informal removal of Federal Reserve Board Governor Lisa Cook and his attempts to influence the independent central bank that manages monetary policy in the United States.
On Wednesday, oral arguments resonated in the courtroom of Federal Reserve Chairman Jerome Powell – currently under investigation by the Justice Department. In the months leading up to the federal investigation, Trump had threatened to fire Powell if the chairman did not quickly cut interest rates.
For two hours, justices heard arguments over whether Cook could remain on the board as a lower court ruledwhile the investigation continues to examine whether Trump violated the “Just Cause Removal” Act by firing her via social media in overdue August.
In a letter published Aug. 25 on his Truth Social platform, Trump alleged that Cook committed financial fraud by lying on mortgage documents. Trump said he had “sufficient cause” to remove Cook based on his alleged “fraudulent and potentially criminal financial conduct.”
Under the Federal Reserve Act, the president can only remove board members “for cause” – consistent with Congress’s intent to preserve the central bank’s independence.
Trump says his expulsion of members of independent government agencies is not subject to judicial review.
Cook has denied any wrongdoing and questioned the president, the board and Powell, essentially arguing in court that a “baseless allegation regarding private mortgage applications” made before her Senate confirmation did not constitute grounds for removal. Cook also argued that Trump denied her due process by not giving her notice or a chance to respond to his allegations.
Cook, an appointee of former President Joe Biden, continued to serve on the board without Powell’s interference.
Alito questions ‘hasty manner’ of shooting
During a lengthy questioning by U.S. Attorney General John Sauer, Justices Amy Coney Barrett and Ketanja Brown Jackson asked what the risks were in allowing Cook to remain in office while the administration took the case to lower courts.
“The question is: What harm will there be in leaving this order in place because she is now in office and she is just going to continue with this decision?” Brown asked.
Sauer, Trump’s former personal attorney, said the administration finds “serious, irreparable harm to the public perception of the Federal Reserve by allowing it to remain in office.”
“Do you have evidence related to public perception, or is it just the president’s view?” Jackson, Biden’s nominee, persisted.
Sauer said evidence about Cook’s two separate mortgage loan applications was included in Trump’s “order of dismissal,” referring to a letter posted on social media.
Moments later, Brown asked whether Cook “had an opportunity in some formal proceeding to dispute or clarify this evidence?”
“This is not a formal proceeding. She was given a chance to speak publicly,” Sauer said.
“In the world? She was supposed to write about it and that was the chance to speak out that you say she was given?” Brown asked.
“Yes,” Sauer replied.
Justice Samuel Alito, one of the Supreme Court’s most conservative members, asked Sauer why the expulsion had to be carried out “in such a hurry.”
“You began by outlining what you believe constitutes a factual basis for removal for cause, but no court has ever examined these facts. Are the mortgage applications in this case even included in the docket?” asked Alito, who was appointed to the court under President George W. Bush.
“I know that the text of the social media post, which contains screenshots of the mortgage applications, is on file. I don’t remember if the documentation itself was on file,” Sauer said.
Federal Reserve Independence
For several minutes, over and over again, Justice Brett Kavanaugh pressed Sauer on the importance of the Federal Reserve’s independence.
“Let’s talk about the downstream effects of this in the real world. Because if this were considered a precedent, it seems to me – just thinking about the bigger picture of what’s going on, what’s going on – all of the current president’s nominees would probably be removed because of the issue on January 20, 2029, if there’s a Democratic president, or January 20, 2033.” argued Kavanaugh, who was appointed during Trump’s first term.
“We’re really in the removal at will stage. So what are we doing here?” he asked.
“I can’t predict what future presidents may or may not do,” Sauer replied.
“Well, history is a pretty good guide. Once these tools are unleashed, they will be used by both sides, and usually more often the second time around,” Kavanaugh said.
Kavanaugh later questioned Cook’s lawyer, Paul Clement, whether his argument “wasn’t tipping the scales too much in the other direction from where the general counsel stands.”
Clement replied: “This is a situation where Congress, the political animals and everyone else, knew better than anyone that the short-term temptation to lower interest rates and make effortless money is a long-term disaster, but will be irresistible.
“So they tied their hands by leaving the Fed out of the allocation process, and they tied the president’s hands,” said the Alexandria, Virginia-based lawyer.
In a statement after arguments, Cook said the case was about “whether the Federal Reserve will set policy rates based on evidence and independent judgment, or whether it will bow to political pressure.”
“Research and experience show that Federal Reserve independence is essential to fulfilling Congress’s mandate of price stability and maximum employment. That’s why Congress has chosen to insulate the Federal Reserve from political threats while holding it accountable for carrying out that mandate. As long as I serve at the Federal Reserve, I will uphold the principle of political independence in service to the American people,” Cook continued in a statement.
Adjusting interest rates – to nippy inflation or stimulate the economy – is one of the tools the central bank uses to pursue its dual mandate of employment and price stability.
Summons issued
The argument came just a dozen days after Powell received a subpoena from a federal grand jury as part of a Justice Department investigation into allegations that he lied to Congress about the multiyear costs of renovating the central bank’s headquarters in the District of Columbia.
The disclosure of the federal investigation into Powell sparked pointed criticism, even from some Republicans.
Powell charged in a infrequent instance video statement that “the administration’s unprecedented action must be seen in the broader context of administration threats and ongoing pressure.”
He continued: “The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best judgment of what will serve society rather than in accordance with the president’s preferences.”
Trump first nominee Powell in 2017 to lead the Federal Reserve for a four-year term beginning in February 2018. Biden reappointed him in 2021, and Powell received sturdy support in 80-19 Senate confirmation vote.
Wednesday’s arguments also came less than two months after the Supreme Court’s ruling he heard the arguments following Trump’s firing of another member of an independent federal agency, federal Trade Commissioner Rebecca Slaughter.
