The United States Supreme Court has temporarily blocked President Donald Trump from removing Federal Reserve Governor Lisa Cook, saying it will hear full arguments in January on whether the president has the legal authority to dismiss her. The decision means Cook will remain in her position until the case is resolved.
The announcement on Wednesday marks the first time the high court has taken up a dispute over the firing of a Federal Reserve governor, highlighting an unprecedented test of central bank independence that could have lasting implications for the U.S. financial system.
President Trump has sought to remove Cook, an appointee of former President Joe Biden, in what would be the first attempt by a sitting president to fire a member of the Fed’s Board of Governors. The White House claims Cook engaged in misconduct prior to joining the central bank, allegations she firmly denies.
The Department of Justice asked the court to lift a lower court order blocking Cook’s removal while litigation continues, but the justices declined. Instead, the Supreme Court scheduled arguments for January, effectively allowing Cook to remain in office during the legal battle.
The dispute centers on a provision of the Federal Reserve Act of 1913, which created the modern central bank and shielded its governors from political interference. The law states that a president may only remove a Fed governor “for cause,” though it does not define what constitutes sufficient cause or set out procedures for removal. Until now, the clause had never been tested in court.
Supporters of the Fed’s independence argue that Trump’s move could set a dangerous precedent, allowing political leaders to exert pressure on monetary policy through personnel decisions. They say Cook’s continued service is vital to protecting the credibility of the central bank at a time of economic uncertainty.
Critics of Cook, however, have rallied behind the president, insisting that no official should be immune from accountability if there are legitimate concerns about past conduct. Trump has claimed that Cook falsified records to secure favorable terms on a mortgage before her 2022 appointment to the Fed. Cook has categorically rejected those accusations.
U.S. District Judge Jia Cobb, sitting in Washington, ruled on September 9 that the allegations were not likely sufficient to meet the threshold of “cause” required by the Federal Reserve Act. Cobb’s ruling temporarily blocked Trump from removing Cook, setting the stage for the current appeal before the Supreme Court.
The stakes are high not only for Cook but also for the balance of power between the White House and the independent central bank. Federal Reserve governors serve staggered 14-year terms to insulate them from political cycles. Cook’s term runs until 2038, giving her a potentially long-lasting influence on monetary policy.
The case also raises broader constitutional questions about the president’s authority to dismiss officials in independent regulatory agencies. Legal scholars note that the Supreme Court has in recent years expanded presidential power over such agencies but has not previously confronted the issue of the Fed, long considered one of the most insulated institutions in government.
Financial markets are watching closely, as any perception of political intrusion into the Fed could unsettle investor confidence. Analysts warn that if presidents can remove governors at will, it could undermine the central bank’s credibility in setting interest rates and managing inflation.
For now, Cook remains in her role, participating in policy deliberations as the court prepares to weigh the case. Her defenders say she has been unfairly targeted for political reasons, while the administration insists the move is about integrity, not monetary policy.
The Biden administration, which appointed Cook, has remained publicly supportive of her, stressing the importance of respecting the Federal Reserve Act’s safeguards. Congressional Democrats have echoed that position, accusing Trump of trying to politicize the central bank.
Republicans in Congress have generally backed the president, arguing that the courts should not limit his ability to remove officials accused of misconduct. They contend that leaving the issue unresolved could weaken executive accountability.
The Supreme Court’s eventual ruling will likely shape not only Cook’s future but also the broader boundaries of presidential authority over independent agencies. A decision in Trump’s favor could embolden future presidents to challenge long-standing institutional norms. A ruling for Cook would reaffirm the principle of central bank independence enshrined since 1913.
Until then, Lisa Cook continues her work as a Federal Reserve governor, her position secured at least temporarily by the highest court in the nation. The January arguments are expected to draw intense attention from lawmakers, legal experts, and financial markets alike, as the country awaits clarity on one of the most consequential legal battles in the history of the Federal Reserve.
