The U.S. Supreme Court has rejected President Donald Trump’s attempt to dismiss Federal Reserve governor Lisa Cook, upholding the central bank’s autonomy against a rare challenge by the president. In a 5-4 decision, the court blocked Trump’s endeavor to remove Cook, who is the first Black woman to serve as a Fed governor, citing unfounded mortgage fraud allegations. Chief Justice John Roberts emphasized that Trump did not provide Cook with the necessary procedural protections required by law to challenge the accusations against her.
Federal Reserve governors have fixed 14-year terms and can only be removed “for cause,” according to Roberts. Cook, who plays a pivotal role in shaping U.S. monetary policy alongside the central bank’s board and regional Fed bank heads, was appointed by President Joe Biden in 2022 and is expected to serve until 2038. She has spent $1.2 million on legal services to contest her removal, as revealed in a recent legal filing.
Cook affirmed that the Supreme Court’s decision underscores the importance of due process and real cause in maintaining Federal Reserve independence, critical for achieving price stability and full employment as mandated by Congress. She maintained that the attempt to remove her was based on a fabricated pretext due to her refusal to succumb to political pressures and her commitment to setting interest rates in the best interest of the American populace.
The 1913 Federal Reserve Act safeguards the central bank from political interference, requiring governors to be dismissed by the president only for specific reasons. Despite the ruling, the Justice Department can still pursue an indictment against Cook for alleged mortgage fraud. Trump’s actions against Cook and the investigation into former Fed chair Jerome Powell marked significant challenges to the central bank’s autonomy.
In a separate case, the Supreme Court supported Trump’s dismissal of Democratic Federal Trade Commission member Rebecca Slaughter, overriding a 1935 precedent that granted Congress the authority to shield certain regulatory agency leaders from presidential removal without cause. Trump’s exercise of executive authority to alter various policies has generally been upheld by the Supreme Court, except for select instances like the tariffs decision.
Slaughter, appointed by Biden with a term until 2029, criticized the court’s decision, expressing concerns that it consolidates power in the hands of the president at the expense of congressional oversight and public interest. Trump’s administration argued that the FTC had gained substantial executive power over the years, diminishing the relevance of the 1935 ruling.