US Supreme Court appears reluctant to let Trump fire Federal Reserve’s Lisa Cook

WASHINGTON - US Supreme Court justices signalled scepticism on Jan 21 towards President Donald Trump’s

unprecedented bid to fire Federal Reserve governor Lisa Cook

in a case with the central bank’s independence at stake.

During about two hours of arguments, the justices indicated they are unlikely to grant the Trump administration’s request to lift a judge’s order barring ​the Republican president from immediately firing Dr Cook while her legal challenge continues to play out.

Since the Fed was created in 1913, no president has tried to oust an official from the central bank. Questions posed by the justices - conservatives and liberals alike - reflected this first-ever nature of Mr Trump’s action. They debated issues with little legal precedent to guide them, including what constitutes adequate “cause” under federal law to remove a Fed official, or what procedures are needed to ensure fairness for Dr Cook.

Justices express unease

The justices expressed unease about the ramifications for the Fed’s cherished independence from political influence if they endorse the Trump administration’s arguments that the president acted within his powers in seeking to remove Dr Cook.

Some pressed US Solicitor-General D. John Sauer, arguing for the administration, about why Dr Cook was not given a chance to formally respond to the unproven mortgage fraud allegations - which she has denied - that Mr Trump cited as justification to oust her, and the impact on the economy of a first-ever Fed firing.

“Your position that there’s no judicial review, no process required, no remedy available, very low bar for cause that the president alone determines - I mean, that would weaken, if not shatter, the independence of the Federal Reserve,” conservative Justice Brett Kavanaugh told Mr Sauer.

The administration’s position would create a system that gives a president incentives to come up with “trivial or inconsequential or old allegations that are very difficult to disprove,” Justice Kavanaugh added.

US District Judge Jia Cobb in September ruled that Mr Trump’s attempt to remove Dr Cook without notice or a hearing likely violated her right to due process under the US Constitution’s Fifth Amendment. Judge Cobb also found that the mortgage fraud allegations likely were not a sufficient cause to remove a Fed governor under the law, noting that the alleged conduct occurred before Dr Cook held the Fed post.

An appeals court declined Mr Trump’s request to put Judge Cobb’s order on hold. When the Supreme Court, which has a 6-3 conservative majority, agreed in October to hear the case, it left Dr Cook in her job for the time being.

This marks the latest case to reach the top US judicial body involving Mr Trump’s expansive view of presidential powers since returning to office 12 months ago.

“This case is about whether the Federal Reserve will set key interest rates guided by evidence and independent judgment or will succumb to political pressure,” Dr Cook, who attended the arguments, said in a statement afterwards.

Dr Cook has called the allegations against her a pretext to remove her over monetary policy differences as Mr Trump heaps pressure on the central bank to cut interest rates and lashes out at Fed chair Jerome Powell for not doing so more quickly. The administration ‍this month opened a criminal investigation into Mr Powell over a Fed building project. Like Dr Cook, Mr Powell called the move a pretext aimed at gaining influence over monetary policy.

‘Deceit or gross negligence’

Mr Sauer told the justices that the allegations against Dr Cook - that she cited two different properties as a principal residence in her mortgage applications - impugn her ability to serve as a Fed governor.

“The American people should not have their interest rates determined by someone who was, at best, grossly negligent in obtaining favourable interest rates for herself,” Mr Sauer said.

Conservative Chief Justice John Roberts asked Mr Sauer to explain whether his argument that Dr Cook should be immediately removed applies if the mortgage allegations were an “inadvertent mistake contradicted by other documents in the record.”

Justice Roberts also expressed doubts about Mr Sauer’s arguments that the president’s assertion of a cause is not reviewable by the courts, or that judges cannot reinstate a fired officer.

In creating the Fed, Congress passed a law that included provisions meant to insulate the central bank from political interference, requiring governors to be removed by a president only “for cause,” though the law does not define the term nor establish procedures for removal.

Mr Paul Clement, the lawyer arguing for Dr Cook, said that the Fed’s unique status means that its officers must have greater protections than the Trump administration suggests.

“There’s no rational reason to go through all the trouble of creating this unique quasi-private entity that is exempt from everything from the (congressional) appropriations process to the civil service laws just to give it a removal restriction that is as toothless as the president imagines,” Mr Clement said.

As a Fed governor, Dr Cook helps set US monetary policy with the rest of the central bank’s seven-member board and the heads of the 12 regional Fed banks. Her term in the job runs to 2038. Dr Cook was appointed in 2022 by Democratic former president Joe Biden as the first black woman to serve in the post.

A Supreme Court ruling is expected by the end of June but could come sooner. It was unclear how narrow or broad a ruling favouring Dr Cook might be or how the case would proceed if the justices return it to the lower courts, leaving open the possibility of the matter returning to the Supreme Court on appeal.

‘Ms Cook, you’re fired’

The president sought to fire Dr Cook in August 2025 by posting a termination letter on social media citing the mortgage fraud allegations disclosed by Federal Housing Finance Agency director Bill Pulte, a Trump appointee.

The justices questioned Mr Sauer on his contention that Dr Cook was not entitled to formal notice and a hearing before removal by the president, or that the president’s action fulfilled those requirements.

Liberal Justice Ketanji Brown Jackson voiced doubt that Dr Cook was given any opportunity to contest the allegations.

“She was supposed to post about it and that was the opportunity to be heard that you’re saying was afforded to her in this case?” Justice Jackson asked Mr Sauer.

“The president just really has to say, ‘Ms Cook, you’re fired?’” liberal Justice Elena Kagan asked Mr Sauer.

Conservative Justice Amy Coney Barrett also questioned why the administration has denied Dr Cook a hearing to defend herself, saying that it “wouldn’t be that big a deal” to lay out the alleged evidence and hear her response.

Conservative Justice Samuel Alito expressed concern that the administration has handled the case “in a very cursory manner.” Though the case involves Mr Trump’s asserted cause to fire Dr Cook, Justice Alito said, “No court has ever explored those facts. Are the mortgage applications even in the record in this case?”

Justice Alito voiced scepticism towards Mr Clement’s argument that a Fed governor’s conduct before taking office cannot provide a basis for removal by the president, asking Dr Cook’s attorney to address a series of egregious hypothetical scenarios.

“How about if, after the person assumes office, videos are disclosed in which the office holder is expressing deep admiration for Hitler or for the Klan?” Justice Alito asked.

The Supreme Court has backed Mr Trump in a series of emergency rulings since he returned to the presidency on immigration, mass federal layoffs, cutting foreign aid, dismantling the Education Department and other matters. REUTERS