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Supreme Court justices appeared sceptical of Donald Trump’s efforts to sack Federal Reserve governor Lisa Cook, in a case with broad implications for the independence of the world’s most important central bank.
The hearing comes after Trump moved to fire Cook in August over accusations she committed mortgage fraud, which she denies. It marked the first time a US president had attempted to remove a Fed governor.
A federal judge halted the move while litigation was pending, a decision that was later upheld by an appeals court. The top US court later blocked Trump’s attempt to sack Cook until it had heard oral arguments in the case.
Supreme Court justices on Wednesday appeared wary of solicitor-general John Sauer’s arguments that the courts should not have reinstated Cook.
Justice Samuel Alito, an appointee of Republican former president George W Bush, referred to the “hurried manner” the Trump administration was seeking to remove the Fed governor.
The hearing, which Fed chair Jay Powell attended, is seen as a pivotal test of the independence of the US central bank, which Trump has relentlessly criticised for not bowing to his calls for drastic interest rate cuts.
The Fed’s top officials can only be fired by the president “for cause” — a rarely tested term that is usually interpreted by legal scholars as gross malfeasance.
Paul Clement, acting for Cook, described Sauer’s arguments as reducing “the removal restriction in this unique institution to something that could only be recognised as at will”.
The US Department of Justice this month launched a criminal investigation into Powell over a $2.5bn renovation of the bank’s Washington headquarters. The Fed chair has rejected the allegations and said the probe was a pretext to erode the central bank’s independence to set rates freely.
The move triggered a fierce backlash, with all living former Fed chairs and many international central bankers rallying behind Powell. Several members of Trump’s Republican Party also harshly criticised the justice department’s investigation.
Underlining the tensions between the Fed and the administration, Treasury secretary Scott Bessent said on Tuesday that it was a “mistake” for the Fed chair to attend the Supreme Court hearing over Cook.
Bessent, who has previously been reluctant to criticise Powell directly, accused him of “trying to put his thumb on the scale” by attending. Powell and the Fed were named defendants in Cook’s initial lawsuit filed in a lower court.
The Fed declined to comment on remarks by the Treasury secretary, who attended oral arguments himself in a separate Supreme Court case challenging Trump’s tariffs policy.
The Cook case has thrust the Supreme Court into one of Trump’s boldest efforts to reshape the government. It comes as America’s most powerful bench weighs in on several aspects of the president’s sprawling agenda in his second term — from immigration to tariffs — which is raising fundamental questions around presidential authority.
Trump attempted to fire Cook — the first Black woman to serve as a Fed governor — after Federal Housing Finance Agency director Bill Pulte alleged she had claimed both a house in Michigan and a condominium in Atlanta as her principal residence on mortgage forms.
Trump has argued that Pulte’s allegations allow him to remove Cook “for cause”, a principle that has rarely been tested in court but is typically interpreted as gross misconduct.
The president “lawfully” removed Cook, whose “conduct creates an intolerable appearance of impropriety in financial matters”, the government alleged in a court filing.
Cook, who was appointed to the Fed by former president Joe Biden in 2022, has denied the allegations and has not been charged. The Fed’s “historic independence and statutory for-cause protection . . . prohibits Governor Cook’s precipitous removal”, her lawyers argued in a brief.
She “was ‘criminally referred’ by a presidential subordinate who has used his office to initiate investigations of the President’s perceived opponents, including Chair Powell,” they added. The DoJ has rejected accusations of political interference.
The Supreme Court has allowed Trump to remove officials at independent agencies including the National Labor Relations Board and the Merit Systems Protection Board. But the order signalled Fed officials may be subject to stronger protections.