US Supreme Court Blocks Trump's Attempt to Fire Fed Governor Lisa Cook

The Court's Reasoning

Cook stated that one of the two properties had been declared as a vacation home in the applications. She also argued that any misrepresentations she may have made unknowingly had occurred years before her appointment as governor when taking out a private mortgage. Her lawyers accused government officials of selectively plucking statements from their client's mortgage documents in order to cast entirely lawful documents in a doubtful light. They pointed to reports that four members of Trump's cabinet as well as Attorney General Todd Blanche had submitted similar mortgage applications without anyone alleging misconduct.

In his opinion, Chief Justice John Roberts made clear that the governors of the Federal Reserve are not subject to the president's discretion: "Die Gouverneure der Federal Reserve unterstehen nicht dem Belieben des Präsidenten – stattdessen üben sie ihr Amt in gestaffelten 14-Jahres-Amtszeiten aus und können nur aus wichtigem Grund abberufen werden." The justices emphasized that removal from office is possible only for dereliction of duty or malfeasance. Trump had moreover denied Cook the statutorily required procedural protections, without which she could not adequately defend herself against the accusations brought against her.

Historical Context of the Federal Reserve

Roberts went on to write that the Federal Reserve is a "uniquely structured ... entity that stands in the particular historical tradition of the First and Second Banks of the United States." The central bank was created in 1913 by Congress in response to a series of financial crises in the late 19th century. With the exception of Fed Chair Jerome Powell, all living former or sitting Fed chairs, all treasury secretaries, and prominent economists from both parties had filed an amicus brief with the Supreme Court, urgently asking the court not to weaken the independence of the central bank.

The decision was preceded by a hearing in January, in which the court had already shown skepticism toward Trump's position. In October, the Supreme Court had already ruled to keep Cook in office pending further proceedings. Several other courts had likewise issued orders against the dismissal.

Reactions and Political Pressure

Cook herself said after the decision that the ruling affirms the Federal Reserve's obligation to make its monetary policy decisions independently and free from political influence. It was not about mortgage documents signed years before her appointment. The dismissal had been an attempt to remove her under a contrived pretext because she had refused to submit to political pressure and continued to set interest rates solely based on what best serves the American people.

Trump had repeatedly exerted massive pressure on the central bank to lower key interest rates faster and more sharply than the Fed deemed appropriate in the fight against persistent inflation. The Justice Department under Trump had also opened a criminal investigation into Fed Chair Jerome Powell over cost overruns in the renovation of two Fed buildings. That investigation was later dropped after a Republican senator threatened to block Trump's nominee to succeed Powell as Fed chair. Powell then decided to serve out his regular term as a member of the Fed Board of Governors.

The decision in the Cook case stands in striking contrast to another landmark ruling by the Supreme Court from the same period. On Thursday, the court's conservative majority had voted 6 to 3 to overturn a decades-old precedent from 1935, thereby strengthening the president's powers over independent federal agencies. Under this ruling, members of the Federal Trade Commission (FTC) and other independent agencies may in principle be removed by the president even without the statutorily required justification. This case was triggered by Trump's firing of Democratic FTC Commissioner Rebecca Kelly Slaughter shortly after taking office in 2025. Slaughter had called her dismissal unlawful because the required concrete justification had been absent. Trump had argued at the time that her continued tenure did not align with his administration's priorities.

Tension with Other Independence Rulings

The FTC decision is also likely to have implications for other independent federal agencies. Some of the regulatory bodies affected date back to the 1880s. The justices had based their reasoning in part on the language of the Constitution, which vests all executive power in the president, and concluded from this that officials exercising that power are subordinate to the president and in principle removable by him at any time.

Implications for Other Cases

The New York Times assessed the decision in Cook's favor as a heavy blow to Trump. It likely marks the end of his legal efforts to challenge the jury verdict in the Carroll case. Trump had repeatedly tried to appeal a 2023 civil judgment for sexual abuse before the Supreme Court, in which a New York jury had found that he had assaulted, sexually abused, and later defamed U.S. author E. Jean Carroll in 1996 in a New York department store. A jury had ordered Trump to pay five million U.S. dollars in damages. The criminal charges against Trump in the Carroll case had been time-barred, but the civil route remained open. Trump has consistently denied Carroll's allegations.

On Thursday, the Supreme Court also ruled against Trump in two other cases. The court dismissed a Republican-filed lawsuit challenging a five-day grace period for mail-in ballots in the state of Mississippi, thereby upholding state laws that allow U.S. states to count mail-in ballots received after Election Day as long as they were postmarked on Election Day. The justices made clear that while federal law sets a uniform Election Day, it left open by when ballots must be received. The decision prevents election laws from having to be changed only a few months before the 2026 congressional elections. Trump had supported the lawsuit against the mail-in ballot rules in Mississippi.

Financial markets had followed the outcome of the legal dispute over the independence of the central bank with great attention. Investors regard central bank independence as a high good. The Fed sets U.S. monetary policy, including key interest rates and other economic policy measures. With the decision, this principle remains preserved, at least for the Federal Reserve, for now.

Significance for Financial Markets and the Presidency

Cook is the first African American to serve on the Federal Reserve Board of Governors. Trump's attempt to fire her would have been the first such move by a U.S. president since the central bank's founding in 1913. The conflict thus marks a historic rupture in relations between the White House and the central bank.

During his second term as president, Trump has tested the limits of presidential power in numerous other areas. The Supreme Court's decision in the Cook case draws, at least in the realm of monetary policy, a clear legal line against these efforts for now. Whether Cook remains in office permanently now depends on the outcome of the proceedings in the lower court.

The four justices in the minority were the conservatives Clarence Thomas, Samuel Alito, Neil Gorsuch, and Amy Coney Barrett. Together with the three liberal justices, Roberts and fellow conservative Brett Kavanaugh formed the majority. The split within the conservative camp on this question underscores the significance of the ruling for the relationship between the executive branch and independent institutions in the United States.