Supreme Court rejected Trump’s attempt to fire Fed Governor Lisa Cook

The Supreme Court has refused to support President Donald Trump in his attempt to fire Federal Reserve Governor Lisa Cook, after justices raised serious doubts about the legal grounds and the threat it posed to the Fed’s independence.

Trump’s lawyers argued that Lisa could be fired “for cause” based on uncharged mortgage fraud allegations. They also claimed no court review was needed. That set off alarms inside the courtroom.

Justice Brett Kavanaugh told Trump’s solicitor general, D. John Sauer, that the argument could seriously damage the Fed’s structure. He said the idea that “the president alone” can decide what counts as cause, with no process or legal check, would “weaken, if not shatter, the independence of the Federal Reserve.”

Lisa sat inside the courtroom as this unfolded. She had sued Trump in September, saying his claim to fire her violated the Federal Reserve Act, which only allows firing “for cause.” The law doesn’t define the term clearly, but it’s always meant serious wrongdoing during someone’s time in office, not before.

Justices question speed of firing and lack of hard evidence

Justice Ketanji Brown Jackson pressed Sauer hard. She asked, “Do you have evidence other than the president’s view?” Sauer answered that Lisa’s presence was damaging to the Fed’s public image.

Jackson wasn’t convinced. She asked if the public was really being harmed by her staying in her role while the case was still ongoing in district court.

Justice Samuel Alito, one of the conservatives usually aligned with Trump, also showed doubt. He asked why the White House, the district court, and the appeals court all pushed the process forward so quickly. “Is there any reason why this whole matter had to be handled… in such a hurried manner?” Alito asked. He also said that when the issue was in the executive branch, it was dealt with “in a very cursory manner.”

Lisa is the first Black woman to serve on the Fed board. She was first appointed by President Joe Biden in 2022, to complete an unfinished term. In 2023, Biden reappointed her for a full 14-year term.

Trump didn’t mention her interest rate stance when he said he was firing her. He pointed instead to claims by Federal Housing Finance Director Bill Pulte that Lisa had lied on old mortgage applications. Those claims predate her time on the Fed board. No charges were filed.

Lisa’s legal team says Fed is being treated like a political tool

Lisa’s lawyer, Paul Clement, told the court there’s no reason to treat the Fed like any regular federal agency. He said the court itself had called the Fed a “uniquely structured, quasi-private entity” in a recent ruling.

“There’s no rational reason to go through all the trouble of creating this unique, quasi-private entity… just to give it a removal restriction that is as toothless as the president imagines,” Clement said.

He argued that if the removal rules had any actual power, then the Supreme Court should reject Trump’s request to fire her immediately.

Judge Jia Cobb, who reviewed the case in district court, already ruled that Lisa can stay on the job for now. Cobb said Lisa has a strong case that Trump’s action violated the Federal Reserve Act. She wrote that the best way to read the “for cause” rule is to apply it only to actions that happen while someone is serving on the board, not to anything that came before.

Also present in court was Fed Chair Jerome Powell, who is now facing a criminal investigation over his role in a multibillion-dollar renovation of the Fed’s Washington, D.C. headquarters. Powell said the investigation is politically motivated, pointing to Trump’s anger at the Fed keeping interest rates steady last year.

Lisa supported Powell in that decision. After the hearing, she said, “This case is about whether the Federal Reserve will set key interest rates guided by evidence and independent judgment or will succumb to political pressure.”

She added, “Research and experience show that Federal Reserve independence is essential to fulfilling the congressional mandate of price stability and maximum employment. That is why Congress chose to insulate the Federal Reserve from political threats, while holding it accountable.”

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