WASHINGTON — The Supreme Court seemed likely to prevent the federal government from removing Federal Reserve Board Governor Lisa Cook from her position while her legal challenges against the government continue to make their way through the court system.
Wednesday morning’s oral arguments included two hours of questioning directed at both sides on a variety of topics, including what it means to fire a Federal Reserve Board Governor “for cause” and what type of notice is required beforehand. Justices seemed especially concerned about how a ruling could impact the independence of the Federal Reserve.
Justice Brett Kavanaugh said some of the government’s arguments in the case would “weaken, if not shatter, the independence of the Federal Reserve.”
The Federal Reserve determines monetary policy, like interest rates, while focusing on long-term economic growth and stability. Members of the Federal Reserve’s Board of Governors are appointed by the President, confirmed by the Senate and serve staggered 14-year terms to prevent undue influence by any one administration.
The Court said the Federal Reserve System is a “uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States” in the majority opinion of Trump v. Wilcox (2025), a case regarding the firing of a National Labor Relations Board member.
Members of the Federal Reserve’s Board of Governors can only be removed by the President “for cause,” a standard that the Justices questioned both sides about at length during oral arguments.
In Cook’s case, President Donald Trump said the cause for the firing was allegations of mortgage fraud committed by listing both a home in Michigan and a residence in Georgia as her primary residence, according to a Truth Social post from August.
Cook sued in district court, and the judge in the case ruled in September that Cook could continue to serve on the Federal Reserve’s Board of Governors during the appeal process. Soon after, the D.C. Circuit Court upheld the lower court’s ruling in a 2-1 decision.
The federal government then asked the Supreme Court for an emergency stay on the lower courts’ decision, which would prevent a lower court ruling from going into place while the litigation is pending, effectively firing Cook.
Justice Brett Kavanaugh questioned John Sauer, the Solicitor General and lawyer representing the Trump administration, about the precedent that the Court could set by allowing Trump to fire Cook solely based on allegations of misconduct.
Kavanaugh said that it would likely result in “at-will removal,” where, anytime a new president takes power, the previous administration’s appointees are removed.
“Once these tools are unleashed, they are used by both sides and more the second time around,” Kavanaugh said.
Some justices also appeared concerned about potentially unresolved questions in the facts of the case.
Justice Samuel Alito questioned why the case had to be handled “in such a hurried manner” before the claims of mortgage fraud leveled against Cook were investigated.
“You began by laying out what you claim to be the ‘for cause’ removal, but no court has explored the facts of the case,” Alito said to Sauer.
Justices Sonia Sotomayor and Ketanji Brown Jackson expressed skepticism around the issue of a Truth Social post being sufficient notice prior to Cook’s firing, another important question in the case.
Some Justices also indicated that they wanted the lower courts to review some of the more complicated questions surrounding it.
“To have lower courts look at these issues first makes the most sense for the public’s confidence and the world’s confidence in the due process of law,” Sotomayor said.
Justices mainly questioned Attorney Paul Clement, Cook’s lawyer, on the meaning of the “for cause” standard and what an appropriate notice and hearing would look like.
The Court went through various hypotheticals over both in and out of office conduct, including a history of sexual harassment, stealing and vocal support of Hitler or the Ku Klux Klan.
While the Court has allowed the firing of officials in other recent cases regarding independent executive agencies, Cook has remained in office.
“It’s less important that the President have full faith in every single governor and it’s more important that the markets and the public have faith in the independence of the Fed from the President and from Congress,” Clement said.
If the Court rules in favor of Trump and removes Cook from her office, the Federal Reserve would lose its longstanding independence. In the 112 years since its creation, no President has removed a member of the Federal Reserve’s Board of Governors.
“Keeping the Fed independent is important because the political temptation will always be to lower interest rates shortly before an election to kind of goose the economy. The party in power tends to do a lot better when the economy is good,” said Patrick Borchers, Lilli Family Professorship in Law Professor at Creighton University. There may also be downstream negative consequences to constantly giving the economy a sugar high. It might get fat, and might have inflationary aspects down the road that are going to be hard to deal with.”
A decision in the case is expected by the summer.