Two days after Martin Luther King, Jr. Day, Lisa Cook, the first Black woman to serve as a Federal Reserve governor, stood before the Supreme Court with her future and the Fed’s independence on the line. On Wednesday (Jan. 21), oral arguments began in a case that will decide whether President Donald Trump can fire Cook. According to CNN, Federal Reserve Chair Jerome Powell, other bankers and family members attended in a powerful show of support.
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The case stalled last fall when the Supreme Court paused Trump’s efforts to end Cook’s career. Now it’s back in the spotlight as lawyers on both sides argue about the extent of presidential power.
How We Got Here
The case centers on the Federal Reserve (the Fed), an independent agency created by Congress to operate outside direct White House control. In its 112-year history, no sitting president has ever fired a Fed governor, according to WABE. Yet Trump tried to do exactly that last August in full “You’re fired” mode when he tried to oust Cook with all the theatrics of reality TV.
Posting her immediate removal on Truth Social, Trump accused her of mortgage fraud based on businessman Bill Pulte‘s unsubstantiated claims. Cook was never charged.
She pushed back, arguing there was no legitimate cause for removal and no opportunity to present her side. Cook sued, setting up a legal fight over the limits of executive power and the Fed’s independence.
The Legal Battle Over ‘Cause’
Cook’s team called Trump’s allegations “flimsy” and “unproven,” according to CBS News. Trump’s team cited the Federal Reserve Act of 1913, which lets a president remove a Fed board member “for cause” but doesn’t define it, according to CNBC. Typically, “cause” means misconduct or failure to do the job. Trump’s lawyers claim the president can remove Fed governors for any reason.
Critics warn that if “cause” is reduced to whatever the president decides, the Fed is cooked. If the president can fire Fed governors with his own definition of “cause,” other independent agencies could be next.
The Stakes Are High
If the Court rules in Cook’s favor, the implications go far beyond her job. She will keep her seat and finish her 14-year term, and the Fed will remain protected from White House interference. This outcome would confirm that presidents cannot fire federal officials without a valid reason, and that “cause” must be limited.
It would also protect other independent agencies, like the FTC, from political bullying and allow experts to do their jobs without fear of being fired for disagreeing with the president.
If Trump wins, the presidency would gain broad power to fire Fed governors for any reason, and the Fed would lose its independence. ABC News reports economists warn this would undermine confidence in the Fed, compromise policy and destabilize markets, as the president could influence interest rates.
The snowball effect could mean that nonpartisan government disappears. Future presidents could remove independent experts who disagree with them, putting the country’s money and markets under the Oval Office’s control.
The danger isn’t just theoretical. Trump has repeatedly complained that interest rates are too high. ABC News links his disapproval of rates to the timing of his attack on Cook. Reuters notes central banks work best when free from political pressure, since controlling inflation sometimes requires unpopular choices that could hurt politicians at the ballot box.
As the nation waits for the Court’s decision, outlets including the Washington Post suggest the Court may side with Cook. The case exposes how fragile the guardrails of America’s economic system have become and how easily, in this America, independence can become conditional.
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