The U.S. Supreme Court blocked President Donald Trump’s attempt to dismiss the central bank governor with a ruling confirming the independence of the Federal Reserve System (Fed).
In a 5-4 ruling, the justices of the nation’s highest court said the administration did not provide Federal Reserve President Lisa Cook with sufficient “due process” to challenge her removal.
The decision sends the matter back to lower courts, where the administration will have to prove claims that Cook committed mortgage fraud before it can proceed with dismissal, and Cook will have the opportunity to challenge the accusations.
Cook has denied charges that Fed defenders say is a pretext to allow President Trump to exercise more control over the bank.
The law states that the president can only remove the Federal Reserve governor “for cause.”
These requirements were intended to protect banks from political pressure and help them set policies to achieve long-term economic goals rather than short-term profits.
In court in January, Cook’s attorney, Paul Clements, said the administration’s handling of the layoffs would make Congress’s intention to protect the Fed “nothing but a joke.”
Trump announced plans to fire Cook from the Federal Reserve last August on social media, citing claims that Cook submitted mortgage forms for two different primary residences at the same time. Banks usually offer lower interest rates on primary homes.
Attorney General John Sauer, who filed the lawsuit for the White House, told the court in January that the social media posts provided ample notice and opportunity to respond.
He said that even if the problem was unintentional, it amounted to “negligence” that could undermine trust in the Federal Reserve and that the court should defer to the president’s judgment in finding the cause.
After the ruling, Cook said in a statement that the case “is not about mortgage documents.”
She called the claims a “concocted pretext” because she refused to bow to political pressure on interest rates.
She added that central banks should make policy decisions based on “independent judgment without political interference.”
The Supreme Court’s Cook decision shielded the Federal Reserve from immediate interference from the White House, but it also issued another ruling Monday that undermines the independence of other federal regulators.
In a separate 6-3 decision written by Chief Justice John Roberts, the court handed the Trump administration a major victory by ruling that the president can fire members of independent agencies at will.
The ruling makes agencies like the Federal Trade Commission (FTC) far more vulnerable to changes in administrative priorities and effectively overturns a 90-year-old legal precedent known as Humphrey’s Executor.
The 1935 ruling protected independent institutions by stating that members could not be removed without good cause.
The legal action stems from Trump firing FTC Commissioner Rebecca Slaughter via email in March 2025. The Democratic Party leader was dismissed., external Because it is “not consistent with (the) administration’s priorities.”
Chief Justice Roberts wrote that because these members exercise executive power, they are ultimately answerable to the president.
