Topline
Supreme Court justices signaled Wednesday they believe President Donald Trump cannot legally fire Federal Reserve Governor Lisa Cook, at least while the case moves forward, as the court held oral arguments in a landmark debate over the Fed’s independence—coming as the Trump administration has launched new attacks against its chair Jerome Powell.
Federal Reserve Governor Lisa Cook and attorney Abbe Lowell leave the U.S. Supreme Court on January 21 in Washington, DC.
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Key Facts
The court heard oral arguments in Trump v. Lisa Cook, a dispute over whether Trump can fire Cook from the Fed’s board because of alleged issues with her personal mortgages, which she denies.
Trump said in August he was firing Cook because of the perceived mortgage issues, but she has remained on the board as courts have sided with her and struck down her termination, and the Supreme Court is considering whether to uphold a lower court order keeping Cook in her role while the litigation moves forward.
The Federal Reserve Act only allows presidents to fire members of the Fed’s board “for cause,” which typically refers to some kind of gross misconduct on the job—something that wasn’t the case here, Cook’s attorneys argue.
Justices on the 6-3 conservative court signaled they were broadly skeptical of upholding Trump’s decision, with Justice Brett Kavanaugh saying that allowing presidents to freely fire Fed governors could “weaken, if not shatter, the independence of the Federal Reserve,” and Justice Amy Coney Barrett raising arguments from economists that firing Cook would harm the economy.
Even Justice Samuel Alito, one of the court’s staunchest conservatives, raised questions about the case, asking Solicitor General D. John Sauer why the case over Cook’s firing had to be handled “in such a hurried manner” and suggesting the Trump administration decided to fire the board member “in a very cursory manner.”
The case is distinct from another dispute the high court is considering over whether Trump can fire other members of independent boards, as justices have suggested they believe the Federal Reserve has a higher degree of independence than other federal agencies do, and any firings there should be held to a higher standard.
What To Watch For
The Supreme Court will likely rule in a few months, sometime before the court’s term ends in late June. Cook will remain in her job at the Fed while the court is deliberating. The court has been asked to decide whether to pause or uphold a lower court order that keeps Cook in her job while the case moves forward, rather than issue a final ruling in the case. That means it’s possible the case will keep playing out in the lower courts and could even return to the Supreme Court again, though it’s still possible justices could nevertheless go ahead and issue a more final ruling now that would avoid further litigation. It still remains to be seen how the court will rule and whether it will deal with the thornier legal issues over what it means to fire a Fed governor “for cause,” or just issue a more straightforward ruling focused on the specifics of Cook’s case.
Crucial Quote
Kavanaugh warned Wednesday of “the real world, downstream effects of” upholding Cook’s firing, arguing that “what goes around, comes around” and suggesting a future Democratic president could use Cook’s firing as a justification to get rid of Trump’s Fed appointees. “Once these tools are unleashed, they’re used by both sides,” Kavanaugh said, arguing upholding a broad definition of when a Fed governor can be fired “incentivizes” presidents to carry out “search and destroy” efforts and “come up with … trivial or inconsequential or old allegations” against board members “that are very difficult to disprove.”
What Did The Justices Say?
Key conservative justices on the court broadly signaled they took issue with the Trump administration’s position, which is that presidents have broad latitude to fire Fed governors, as long as some kind of “cause” is given, and its decisions cannot be challenged in court. Chief Justice John Roberts expressed skepticism that the mortgage allegations against Cook were serious enough to warrant removal, describing them as an “inadvertent mistake,” and multiple justices suggested Trump did not give Cook sufficient notice to respond to her firing and make her case. “Why are you afraid of a hearing?” Barrett asked Sauer, suggesting that Trump even just asking Cook to the White House and giving her a chance to explain the mortgage discrepancy “wouldn’t be that big a deal.”
Contra
While justices broadly suggested they were concerned with moving forward with Cook’s firing, they also posed tough questions to her lawyer Paul Clement, wrestling with legal issues in the case like whether Fed governors can ever be fired for misconduct that took place before they took office. Alito raised the hypothetical scenario of someone being fired from a previous job for sexual harassment but signing a non-disclosure agreement that kept the situation hidden until after they took office, for instance. Kavanaugh said that while he cared about the Fed’s independence, he was also wary of tilting the scales too far in the other direction and allowing someone guilty of “serious ethical or other wrongdoing digging in and remaining in office.” That suggests the court could narrowly reject Cook’s firing, but refrain from issuing a more sweeping opinion that would broadly lay out how future Fed terminations can proceed going forward.
Lisa Cook’s Alleged Mortgage Issues Explained
Trump has alleged Cook should be fired because, before joining the Fed, she allegedly made misstatements on mortgage documents, listing her properties in Michigan and Atlanta as both being her “primary” residence. Doing so may have allowed Cook to obtain lower interest rates, which Trump has argued constitutes fraud that makes her unfit to serve on the Fed’s board. Cook has denied any impropriety and described Trump’s allegations as “unsubstantiated” in court filings. Mortgage documents released as part of court proceedings show Cook properly described her Atlanta property as a vacation home in other mortgage application documents, which her attorney Abbe Lowell argued in a letter to the DOJ makes it “impossible to conclude” she intended to commit fraud. Any suggestion in other documents that the property was a primary residence was “at most an inadvertent notation,” Lowell argued. Even if there were issues with her mortgage, Cook’s lawyers argue that still would not justify her firing, because she was not given proper due process to challenge her termination, and her personal mortgage application does not constitute professional misconduct. Cook is one of several Democrats whom the Trump administration has targeted by taking aim at their mortgage filings, along with New York Attorney General Letitia James, Sen. Adam Schiff, D-Calif., and Rep. Eric Swalwell, D-Calif. James is the only one who has so far faced criminal charges, but they were later dismissed, and the government has failed multiple times to reindict her.
What Happens If Trump Fires Lisa Cook?
If Trump is allowed to terminate Cook, it would pave the way for Trump to appoint a majority of the members of the Fed’s board of governors. That could allow the president to exert more control over the board, raising concerns from critics and economists that Trump will infringe on the Fed’s historical independence from political interference. Any interference could raise inflation and roil markets, analysts have speculated, with Bank of America CEO Brian Moynihan telling CBS News in December, “The market … will punish people if we don’t have an independent Fed.”
Surprising Fact
While the Trump administration has targeted Cook for allegedly listing multiple properties as personal residences, ProPublica reports multiple Trump Cabinet members—and the president himself—have used similar tactics in their mortgage filings. All have denied any wrongdoing.
Does Trump’s Investigation Into Jerome Powell Impact Cook’s Case?
The Supreme Court case over Trump firing Cook is completely separate from the Trump administration’s criminal investigation into Powell. The Fed chair, who was present at Wednesday’s oral arguments, has said the Justice Department is investigating him over perceived issues with the Fed’s renovations of its headquarters, though Powell contends the investigation is actually retaliation for him refusing to lower interest rates as Trump wants. Lev Menand, an associate law professor at Columbia University and former economist at the Federal Reserve, told reporters on a press call last week that the controversy over Powell could still “undermine some of the president’s arguments” in the Cook case and “be a problem” for the government at the Supreme Court. The Trump administration is arguing in court that Cook’s firing was “for cause” and solely due to her alleged mortgage issues, rather than any political retaliation, Menand said, but Trump “trying to potentially move a criminal case against the [Fed] chair” at the same time “tends to suggest that the goal here is to take over the Fed and not to figure out whether Lisa Cook committed a removable offense or not.” Justices ultimately did not discuss Powell or the investigation against him at Wednesday’s oral arguments, though it could impact their thinking as they deliberate in the case.
Further Reading
Source: https://www.forbes.com/sites/alisondurkee/2026/01/21/supreme-court-suggests-trump-cannot-fire-lisa-cook-at-least-for-now/
