The Supreme Court has blocked Donald Trump's attempt to remove Federal Reserve Governor Lisa Cook without cause, delivering a rare check on presidential power over the central bank in a 5-4 decision that underscores the Fed's statutory independence.
Cook, the first Black woman to serve on the Fed's board, can remain in her position while disputing fraud allegations leveled by Trump officials. The Court found that the president failed to provide her with procedural protections required by law before termination, making it impossible for her to properly contest the charges against her.
Trump fired Cook via social media last August, claiming she had committed mortgage fraud. Cook denied the allegations and sued, arguing the termination lacked legal grounds. The case centered on whether a president may dismiss a Federal Reserve governor at will or whether statutory protections apply.
Cook's 14-year term runs until 2038. She was appointed by President Joe Biden.
The ruling stands apart from the Court's general deference to Trump in his second term. On the same day, the justices ruled that Trump could fire Federal Trade Commission Commissioner Rebecca Slaughter and affirmed his power to remove a National Labor Relations Board member, tilting the union board's composition. The Court also stripped lower courts of authority to issue nationwide injunctions and stayed a ruling that restricted Immigration and Customs Enforcement from using race and ethnicity in enforcement decisions.
Yet the justices appeared determined to shield the Fed from executive interference. The decision represents a significant victory for an institution under sustained White House pressure.
Trump has waged a campaign against the Federal Reserve for months, angry over interest rates he considers too high. He has blamed Fed leadership for economic stagnation and pushed publicly for rate cuts. His criticism has centered on Jerome Powell, a Fed governor and former chair whom Trump appointed in 2018. Powell announced in early 2025 that he would remain as governor after his chairmanship ended, signaling concern about Fed independence during a period of White House scrutiny.
The Justice Department opened an investigation into Powell over testimony about cost overruns on Fed headquarters renovations. The probe closed in April after public backlash, though the White House suggested other inquiries might continue.
Kevin Warsh took over as Fed chair in May, succeeding Powell. Markets have viewed Warsh as more inclined toward rate cuts than his predecessor.
The Federal Reserve controls interest rates eight times annually through votes by 12 board members, decisions that ripple across the entire economy. Economists widely regard central bank independence from political pressure as vital to price stability and economic growth. The Fed, established in 1913, technically operates within the executive branch but has historically maintained a buffer from White House influence.
Author James Rodriguez: "The Court's willingness to draw a line around the Fed, even as it hands Trump sweeping power elsewhere, signals that institutional independence still carries weight on the bench, at least when it comes to money."
Comments