3:13President Donald Trump addresses journalists during a bilateral conversation with South Korean President Lee Jae Myung in the Oval Office of the White House in Washington, Aug. 25, 2025. Alex Brandon/AP
President Donald Trump’s effort to oust Lisa Cook from the Federal Reserve Board of Governors—an extraordinary expansion of executive authority—positions the dispute for a momentous judicial fight almost certain to reach the U.S. Supreme Court.
When Congress established the nation’s central bank, it expressly aimed to shield the Fed from partisan meddling by providing 14-year terms for governors nominated by a president and affirmed by the Senate.
President Donald Trump speaks to the press during a bilateral meeting with South Korean President Lee Jae Myung in the Oval Office of the White House in Washington, August 25, 2025.Alex Brandon/AP
Federal statute stipulates governors may be displaced solely “for cause,” a phrase generally understood to denote incompetence, dereliction, or misconduct in office.
No commander-in-chief has previously sought to dismiss a Fed governor for cause, and no tribunal has been called upon to adjudicate such an action.
Lisa Cook testifies before a Senate Banking Committee hearing on her nomination to be a member of the Federal Reserve Board of Governors on Capitol Hill in Washington, June 21, 2023.Jonathan Ernst/Reuters, Files
The administration charges Cook—who was tapped by President Biden in 2022—with “grave dereliction,” alleging unsubstantiated mortgage-fraud activity committed prior to her appointment. Cook rejects the accusation as baseless.
Legal scholars suggest her job may hinge on whether the judiciary finds credible proof of purported “misconduct” and on the breadth of presidential leeway in deciding whether that threshold is met.
Cook’s counsel, Abbe Lowell, responded: “President Trump lacks any legal power to sack Federal Reserve Governor Lisa Cook. His effort, resting solely on a referral letter, is devoid of factual or statutory footing. We intend to file suit contesting this unlawful move.”
“Lengthy terms and removal protections bolster Fed autonomy, ensuring that monetary decisions are grounded in empirical data, economic analysis, and the enduring welfare of the American public,” a central-bank spokesperson stated.
The standoff is anticipated to unfold over the coming weeks, with an initial Supreme Court ruling conceivable before the year ends.
Chairman of the Federal Reserve Jerome Powell speaks with Lisa Cook member of the Board of Governors of the Federal Reserve, as he chairs a Federal Reserve Board meeting in Washington, June 25, 2025.Saul Loeb/AFP via Getty Images
“President Trump has no authority to remove Federal Reserve Governor Lisa Cook. His attempt to fire her, based solely on a referral letter, lacks any factual or legal basis,” Cook’s attorney Abbe Lowell said in a statement Tuesday. “We will be filing a lawsuit challenging this illegal action.”
Although the high court lately upheld wide presidential removal power over officers of independent agencies wielding executive authority—such as the Merit Systems Protection Board (MSPB), National Labor Relations Board (NLRB), and Consumer Product Safety Commission (CPSC)—its conservative bloc has underscored that the Fed stands apart.
“The Federal Reserve is a uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States,” the court wrote in an unsigned May opinion that allowed Trump to terminate Democratically-appointed members of the MSPB and NLRB.
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The opinion explicitly preserved the legality of for-cause removal protections at the Fed, implying the justices view its governors as not acting on the president’s behalf.
The definitive result of the landmark clash remains anything but predictable.
As Justice Elena Kagan noted in May—dissenting from her conservative colleagues over Trump’s dismissals at the MSPB and NLRB—“[I] do not doubt the the majority’s intention to avoid imperiling the Fed. But then, today’s order poses a puzzle. For the Federal Reserve’s independence rests on the same constitutional and analytic foundations” as that of the other independent government agencies Congress has created.
Sourse: abcnews.go.com
