The Federal Reserve Act of 1913 stipulates that only the president may remove a Board member and only “for cause,” a phrase historically interpreted to mean malfeasance or dereliction of duty committed while in office. The Justice Department argues that the president’s determination of cause is not reviewable by courts and contends the mortgage accusations meet the threshold because they call Cook’s integrity into question. In appeals filings, prosecutors asserted that allowing an “ethically compromised” official to set interest rates would inflict severe reputational injury on the central bank.
If the Court upholds the dismissal, Trump would achieve a precedent-setting removal and, potentially, an opportunity to reshape the seven-member Board. Cook’s departure, combined with any subsequent vacancy, could allow the president to secure a majority of appointees and exert greater influence over the Federal Open Market Committee’s decisions on interest rates.
Underlying the legal fight is a broader conflict between the White House and the central bank over rate policy. Throughout the previous year, the Federal Reserve maintained its benchmark rate despite repeated public criticism from the president, who favored immediate cuts to spur economic growth. Chair Jerome Powell’s stance triggered a separate criminal investigation by the U.S. Attorney’s Office in Washington regarding a multibillion-dollar renovation of Fed headquarters. Powell has said he believes the probe is politically motivated and linked to his resistance to lowering rates.
Cook consistently supported Powell’s policy approach during votes, fueling speculation that the mortgage-fraud allegations serve as a pretext for her ouster. While the administration denies any connection between monetary policy disagreements and its decision, legal experts note that the timing—Trump’s dismissal letter arrived less than two months after the Board’s final hold-rate decision last year—contributes to perceptions of political interference.
During Wednesday’s hearing, several justices concentrated on statutory intent. They examined whether Congress, in drafting the Federal Reserve Act, meant to shield governors from removal for actions unrelated to their official duties. Justice Sonia Sotomayor observed that past cases applying similar “for cause” language have generally confined removal authority to misconduct committed while serving. Justice Brett Kavanaugh, however, questioned whether serious pre-appointment improprieties could undermine public trust to such an extent that immediate removal is justified.
The Court also weighed the practical implications of either outcome. Upholding Cook’s position would limit executive reach and reinforce the Fed’s traditional independence. Allowing the dismissal could expand presidential control, subjecting future governors to potential removal over policy disagreements cloaked as ethical concerns.
Former central bank leaders have warned against the latter scenario. All living former Federal Reserve chairs—Alan Greenspan, Ben Bernanke and Janet Yellen—joined a bipartisan group of ex-Treasury secretaries and Council of Economic Advisers chairs in an amicus brief urging the Court to block the termination. The filing contends that removing Cook would erode global confidence in the Fed’s autonomy and pave the way for politically driven decisions with long-term economic consequences.
The case has attracted broad attention beyond monetary-policy circles. Legal scholars note that several Supreme Court decisions in recent years have strengthened executive authority over independent agencies, yet none has dealt directly with the Federal Reserve’s unique structure. A decision in favor of Trump could extend those precedents, while a ruling for Cook might carve out a special status for the central bank.
The Court is expected to issue its decision by late June. Until then, Cook continues to participate in Board deliberations, and interest-rate policy remains unchanged. Observers are watching closely to see whether the justices treat the Fed as an exceptional institution or align it with other agencies whose leaders serve at the pleasure of the president.
For background on the Federal Reserve’s governance framework, the Board’s official overview offers a detailed history of its statutory mandate and structure. Interested readers can review that material at the Federal Reserve’s website (federalreserve.gov).
Crédito da imagem: Chip Somodevilla | Getty Images
