Trump Seeks Supreme Court Approval to Remove Lisa Cook from Fed

Trump's Legal Challenge to Remove Fed Governor Lisa Cook

President Donald Trump has escalated his legal battle to remove Federal Reserve Governor Lisa Cook from her position, taking the matter to the Supreme Court. This move comes just a day after the Fed announced its first interest rate cut in months. The case centers on the independence of the Federal Reserve, a critical institution for the U.S. economy, and raises significant questions about the balance of power between the executive branch and the central bank.

Trump’s emergency appeal introduces new legal arguments that could resonate with the 6-3 conservative majority on the Supreme Court. If successful, this would mark the first time a Fed governor is removed by a president in the central bank’s 111-year history. The Federal Reserve’s recent decision to cut rates has drawn sharp criticism from Trump, who has accused Fed Chair Jerome Powell of keeping rates too high. Critics argue that the administration’s real aim is to pressure the Fed into acting more favorably toward its economic agenda.

In its appeal, the administration argued that Cook’s actions—specifically allegations of mortgage fraud—pose a threat to the Fed’s integrity. “The president may reasonably determine that interest rates paid by the American people should not be set by a governor who appears to have lied about facts material to the interest rates she secured for herself,” the appeal stated. Trump fired Cook on August 25 after an administration member alleged she committed mortgage fraud by reporting two different homes as her primary residence, a practice that can yield better loan terms. Subsequent documents revealed that Cook sometimes referred to the second property as a “vacation home.”

Cook Warns of Market Instability

Cook has warned that her removal could lead to market instability, sending shock waves through financial markets and raising concerns about the Fed’s independence. Her attorneys argued that removing her would subvert the Fed’s historical independence and disrupt the American economy. “Temporarily removing her from her post would threaten our Nation’s economic stability and raise questions about the Federal Reserve’s continued independence—risking shock waves in the financial markets that could not easily be undone,” they wrote.

Cook’s legal team also challenged a specific part of Trump’s emergency application: a request for a short-term order from Chief Justice John Roberts to remove her while the Supreme Court considers the case. While the court has allowed the temporary removal of leaders of other independent agencies this year, it has drawn a line around the Fed, recognizing it as a “uniquely structured, quasi-private entity” with a distinct historical tradition.

Legal Challenges and Judicial Responses

A federal court on September 10 blocked Cook’s dismissal, stating that Trump had not provided evidence linking her conduct or job performance to any harm to the board or public interest. The ruling was made by US District Judge Jia Cobb, a Biden nominee. The Trump administration quickly appealed to the DC Circuit, which declined to put Cobb’s ruling on hold.

Two judges on the appeals court, Bradley Garcia and J. Michelle Childs—both Biden nominees—argued that Cook had a property interest in her position and was entitled to some process before removal. However, US Circuit Judge Gregory Katsas, a Trump nominee, dissented, arguing that the allegations against Cook could constitute mortgage fraud if she acted knowingly, which is a felony offense.

In its emergency appeal to the Supreme Court, the Trump administration described the lower courts’ decisions as “improper judicial interference” with the president’s removal authority. The administration dismissed arguments that Cook was entitled to due process before being dismissed, claiming that the lower courts’ theory of principal officers being akin to teachers or civil servants was untenable.

The Broader Implications

The Cook case brings up a key legal question: Who defines “cause” for removal? Trump claims that the allegations against Cook count as “cause” to justify her firing. The administration has cited a 1901 Supreme Court precedent to argue that courts should give the executive wide deference in defining cause for removal.

Just before the Fed’s meeting this week, Trump appointee Stephen Miran was sworn in as a new governor. When asked about Miran’s role as both a White House economic adviser and a Fed governor, Powell emphasized the agency’s commitment to maintaining independence. “Beyond that,” he said, “I really don’t have anything to share.”

Tariffs Case on the Horizon

As the Cook case unfolds, the Supreme Court is also preparing to hear arguments in a major case involving the president’s use of sweeping global tariffs. The parties in that case sought expedited review, and the court has scheduled arguments for November 5, setting up a significant showdown over the centerpiece of the administration’s economic agenda.