The Supreme Court has formally blocked former President Trump’s attempt to dismiss Federal Reserve Governor Lisa Cook, a decision that is expected to reinforce the central bank’s independence.
Trump had sought to remove Cook, a Biden appointee, on August 25, 2025, citing accusations of mortgage fraud made by Federal Housing Finance Agency Director Bill Pulte. Cook has denied any wrongdoing, and independent analyses have reportedly questioned the validity of Pulte’s claims, which predate Cook’s appointment to the Fed board in May 2022.
Cook had filed a lawsuit to prevent her termination and was initially granted an injunction by a District of Columbia federal judge, allowing her to remain in her position during the legal proceedings. The Supreme Court's decision addresses whether Cook was entitled to notice or an administrative hearing before termination and whether courts could review Trump’s decision.
The Federal Reserve Act and "For Cause" Dismissal
The Federal Reserve Act stipulates that members of the Board of Governors can only be fired by the president "for cause," distinguishing such removals from those based on political differences. However, the act does not explicitly define what constitutes "for cause" dismissal.
During oral arguments, Cook's attorneys contended that "for cause" applied only to "inefficiency, neglect of duty, or malfeasance in office," drawing parallels to language in other Progressive-era legislation. The Trump administration's legal team argued that "cause" could encompass "misconduct, incompetence, failure to perform statutory duties, and any other faults ‘implying an unfitness for the place.’"
Significance for Central Bank Independence
The Federal Reserve was designed to operate independently of political influence to focus on long-term economic policy, primarily through setting the federal funds interest rate. The participation of former Fed Chairs Jerome Powell and Ben Bernanke in attending oral arguments underscored the significance of the case for the institution's autonomy.
The case, Trump v. Cook, is among several heard by the Supreme Court this term that examine the scope of presidential executive power. In a separate ruling in February, the high court determined that Trump could not use the International Emergency Economic Powers Act to impose reciprocal tariffs on numerous countries, requiring his administration to refund billions of dollars to businesses impacted by the levies.