White House seeks to remove Cook from Fed board as legal battle tests central bank independence
President Donald Trump’s administration escalated its campaign to remove Federal Reserve Governor Lisa Cook, petitioning the Supreme Court on Thursday to allow her immediate dismissal while a legal challenge over her firing plays out.
The move thrust the issue of central bank independence, already a flashpoint for markets and policymakers, squarely onto the nation’s highest court.
The Justice Department’s emergency appeal came just a day after the Fed announced a 25-basis-point cut rate for the first time since December, signaling more reductions ahead. Trump’s request follows a string of lower court setbacks, with the US Court of Appeals for the District of Columbia Circuit earlier this week allowing Cook to remain in her post as litigation proceeds.
In its filing, Solicitor General D. John Sauer argued that the case “involves improper judicial interference with the President’s removal authority,” and urged the justices to freeze a lower court order that reinstated Cook.
“Put simply, 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—and refuses to explain the apparent misrepresentations,” the administration said.
Cook’s firing on August 25 followed allegations from within the Trump administration that she had committed mortgage fraud by declaring two different homes as her primary residence—a practice that can result in more favorable loan terms. Documents later showed Cook sometimes listed the second property as a vacation home. A federal court blocked her removal on September 10, with Judge Jia Cobb writing that Trump had not identified any conduct or job performance issues that would harm the board or public interest.
Legal experts say the case could set a precedent for the president’s authority to remove members of independent agencies. The core issue of Fed independence is whether the central bank can operate without direct control from the president, no matter who is in office.
“If you want an independent Fed, then you want the Fed governors to have certain kinds of legal protections against pressure from the president,” Kenneth Katkin, law professor at Northern Kentucky University’s Chase College of Law, told Mortgage Professional America.
“That's been the understanding for as long as we've had the Fed, but Trump is fundamentally challenging that. If the Supreme Court rules in favor of Trump, then they will be saying that the concept of Fed independence is over, that we won't have that anymore.”
The administration’s appeal also asked Chief Justice John Roberts for an immediate order to take Cook off the board while the Supreme Court considers the case. The legal wrangling comes as the Fed faces renewed scrutiny over its independence, especially after the recent appointment of Stephen Miran, a Trump economic adviser, to the board.
During a closely watched Senate Banking Committee hearing, Miran pledged to uphold the central bank’s independence. However, he added, “the president is entitled to a view on appropriate monetary policy, as is everyone else interested in the subject.”
