Trump v. Cook: Is the Fed Special?

The Supreme Court held oral arguments in the case of Trump v. Cook, testing on what grounds the President can fire officials of the Federal Reserve. The Court may decide the case on procedural grounds, but questions at oral argument indicated concern both on procedural questions and support for the independence of the Federal Reserve; in all events, the case has significant implications for the independence of the Fed and for US business.

• The President attempted to fire Governor Cook after allegations of mortgage fraud, which she strongly denies.
• At oral argument, the Administration stated that the President’s determination that this met the “for cause” standard of the 1935 Banking Act should not be subject to judicial review and that there was no need for a formal hearing. Counsel for Cook responded that the case should be reviewed by the courts, the standard of “for cause” is far higher than what the government contends, and that the independence of the Fed would be harmed by removing Cook under these circumstances.
• Several Justices seemed clearly to side with Cook on procedural grounds and the importance of judicial review; others raised concerns about independence of the Fed; many seemed concerned that they were being asked to decide important constitutional issues on a hurried basis with an extremely limited record. The Court could therefore return the case to lower courts – likely keeping Cook in office in the meantime.
• Representing a large segment of the business community, the US Chamber of Commerce filed an amicus curiae brief in support of Cook.

Background

Governors of the Federal Reserve are appointed to 14-year staggered terms, and the Banking Act of 1935 limits the President’s powers to remove them only to removal “for cause” (otherwise undefined in the statute).

In August 2025, the President attempted to fire Federal Reserve Governor Lisa Cook, citing allegations of mortgage fraud. Governor Cook strongly denies the allegations. She brought suit challenging her removal, which US District Judge Jia Cobb stayed,¹ writing that Cook is ”substantially likely” to show that these circumstances did not violate the “for cause” requirement, as that requirement should apply only to conduct in office, not before assuming office. Judge Cobb also stated that Cook has a Fifth Amendment right to a hearing to challenge her dismissal; courts have a “responsibility to review” the President’s for cause determinations; otherwise, there would be no practical protection for the Fed Governors against indiscriminate removal. The Administration disagrees, calling Cobb’s ruling “improper judicial interference with the President’s removal authority.” The US Circuit Court of Appeals for the District of Columbia declined to remove the stay,² setting up argument in the Supreme Court.³

Technically, the Supreme Court granted certiorari to decide whether it can issue a stay of a District Court order in the fact pattern presented to it. But as several Justices noted in oral argument, the real issue at stake is ultimately whether Governor Cook can keep her position and whether the President has authority to fire Governors of the Federal Reserve System essentially at will. As Governor Cook put it in her Supreme Court filing, her firing would “dramatically alter the status quo, ignore centuries of history, and transform the Federal Reserve into a body subservient to the President’s will.”⁴

Is the Federal Reserve Different?

In February 2025, the President issued an Executive Order “Ensuring Accountability for all Agencies,” which asserted control over independent regulatory agencies established by Congress, claiming that the agencies are in fact fully part of the Executive Branch which the President heads rather than independent agencies nominally part of the Executive Branch but sometimes termed the “headless fourth branch of government.” Further, the Order states that these agencies “exercise substantial authority without sufficient accountability to the President [.]” Thus, the Order states that “officials who wield vast executive power must be supervised and controlled by the people’s elected President.”

The scope of the Order is broad, affecting all independent regulatory agencies defined under 44 U.S. Code §3502,  including the Federal Reserve. The only exemption in the Order, and it appears as a concession rather than required by statute, is to the “Board of Governors of the Federal Reserve System or to the Federal Open Market Committee in its conduct of monetary policy.” The Order does apply to the Fed “in connection with its conduct and authorities directly related to its supervision and regulation of financial institutions.” Absent that concession, the President would have claimed direct (rather than merely implicit) control over the Fed’s independence in monetary policy, which could clearly have rattled markets.

Removal in Other Agencies

Using the authority of that Executive Order, the President fired Rebecca Slaughter, a Commissioner of the Federal Trade Commission. The Supreme Court heard oral arguments in that case recently (see CED Policy Backgrounder “The Supreme Court and the Limits of Agencies’ Powers”). The Court has not yet ruled in that case. Generally, the Court has sided with the Administration in emergency rulings permitting the firing of “members” (for instance, commissioners) of “multi-member agencies,” in some cases (as with the FTC) despite explicit statutory language limiting removal powers.

However, in a decision on another case about removal powers, Trump v. Wilcox, the Chief Justice wrote that 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.”⁵ In other words, even though the relevant provision of the Banking Act was enacted at almost the same time as other New Deal statutes being challenged, the Fed stands in a different place. All these considerations, as well as other technical procedural issues, serve as background to the oral argument.

Oral Argument

Solicitor General John D. Sauer began with very tough language asserting that Governor Cook had committed “deceit or gross negligence by a financial regulator” which “is cause for removal” and that she had “never substantially disputed the truth” of the allegations (her lawyer did, in fact, issue a statement doing so, and Chief Justice Roberts stated she has said it was a mistake contradicted by other documents). In response to questions about whether notice and a hearing should have been granted, he responded that the President had posted on Truth Social and she did not respond to it (Clement termed this “fundamentally defective notice.”)

While the Administration did not challenge the Trump v. Wilcox standard that the Fed is different than other agencies, Sauer concentrated on the definition of “for cause” (which in its view encompasses pre-office conduct and what he termed “gross negligence”) and argued that the President’s determination was not subject to judicial review – which several Justices suggested would essentially turn the “for cause” statute in practice into removal at will. But should the Justices wish to give a detailed opinion at least part of the case may turn on whether gross negligence meets the “for cause” standard and whether a mistake on a mortgage application constitutes gross negligence. A potentially important note, highlighted in oral argument by Clement and mentioned by the Chief Justice, is that the definition of “for cause” in Black’s Law Dictionary highlights the 1903 Hagerstown case giving a relatively high standard of “for cause.”

Cook’s counsel, former Solicitor General Paul Clement, noted that “[n]o President has tried to remove a Governor for cause” despite the “ever-present temptation for lower rates and easier money.” Using a standard of “apparent misconduct” would, therefore, essentially turn the “for cause” standard into removability at will tenure, ending the independence of the Fed from political interference which Congress provided, with “real bite” to the “for cause” standard.

Another important question is how the Court should determine what constitutes irreparable harm. Sauer argued strongly that the harm is not only to the President but also “grievous irreparable injury to the public perception of the Federal Reserve from allowing her to remain in office” given the nature of the allegation against her and her involvement in setting interest rates. Clement, in sharp contrast, noted that the irreparable harm would be to Cook from losing her position and that “more important” than any harm to the President is that “markets and the public have faith in the independence of the Fed from the President and Congress. This is a situation in which Congress knew that temptation of lower rates was a disaster so tied their own hands by taking the fed out of the appropriations process and tied the President’s hands. In Clements view, the “ultimate imperative is that markets don’t think rates lowered for political pressure.” This forces the balance of harms to shift in favor of Cook and the Fed.

Justices Sotomayor, Barrett and Kavanaugh, in particular, highlighted how the case has implications for the independence of the Federal Reserve; Kavanaugh pressed Sauer on why Congress wanted the Fed to be independent and noted the possible “weakening or even shattering of it,” noting the possibility that a different President could remove all the current President’s appointees in 2029 “for cause” – in other words, essentially at will – and adding a pointed comment that “history is a pretty good guide that one these tools are unleashed,” they will be “used by both sides, more the second time around.” Sauer could only say that there should be a “presumption of regularity” in the President’s actions and responded to Justice Barrett that courts should look at “predictions of doom” in pro-Cook amicus curiae briefs “with a very jaundiced eye.”

All this highlights the question of judicial review. In supporting Cook, the amicus brief of the US Chamber noted that the “lack of judicial review would render the for-cause protection meaningless.”⁶

Many Justices expressed concern that the case was brought on emergency petition; Justice Alito asked why this was being done “in a hurried manner.” One possibility, therefore, is to send the case back to the lower courts for resolution – very likely keeping Cook in office while the case winds its way through the courts. Some Justices, including Kavanaugh, Sotomayor, Barrett, and Jackson at times seemed to suggest this outcome; Sotomayor noted that because the independence of the Fed in making monetary policy would be harmed if courts decide these issues quickly and without due consideration. Clement agreed that "[t]here is simply no reason to abandon 100 years of central-bank independence on an emergency application."

Some Justices raised questions as to what a pre-removal hearing might look like if the Court required one. Sauer said that notice was satisfied by the five days between the initial Truth Social post and the letter of removal, arguing that she should have told her side of the story then (in other words, without a formal process). Clement argued that the absence of a hearing – and the request for a Federal official’s resignation in a Truth Social post -- shows that the President prejudged the matter, which in his view highlights the need for some kind of hearing.

Finally, Clement argued that courts will need to decide what “for cause” means, which implies either judicial review or a strong standard of what the term means. Alternatively, however, Clement said to Justice Kagan that the Court could rule for Cook by deciding that for cause does not mean apparent misconduct, by ruling that the balance of harms favors her, or even because the case is argued on an emergency application, even leaving the lower courts’ opinions in place (and Cook in office) without a formal opinion (it seems doubtful the Court would actually do that).

Analysis 

Given the Court’s seeming reluctance to decide major questions of constitutional law on a limited record and emergency basis, one option is simply to send the case back to the lower courts for further proceedings. In this option, it seems likely the Court would keep Governor Cook in office in the interim – if it had wanted to side with the Administration and remove her, it could easily have done so when the Administration appealed the decision of the appellate court, but it did not.

It is also possible that the Court could issue a somewhat broader opinion, possibly with some elucidation of the meaning of “for cause” in the Banking Act. To keep the Fed special under the Trump v. Wilcox standard, it would presumably either rule quickly or seek to distinguish the situation from its forthcoming decision in Trump v. Slaughter. Here, the “quasi-private” status of the Fed that Chief Justice Roberts noted may help – it is not funded through regular appropriations, Congress clearly intended independence of the Fed in making monetary policy (Sauer did not dispute this when questioned on it), and it does not exercise quintessentially executive powers which would presumably be the reason the Court is willing to support greater Presidential control over independent regulatory agencies such as the FTC. It is even possible that this gets to the meaning of the Chief Justice’s reference to the First and Second Banks of the United States – an understanding of executive powers that did not encompass monetary policymaking but permitted an independent agency that Congress established to do so.

Conclusion

In oral argument, Justice Sotomayor noted that this whole case is “irregular” – on both procedural grounds and on precedential grounds. This may lead the Court to be reluctant to issue a sweeping opinion. It argues for the view that the case may be returned to lower courts for greater findings of fact and considerations of important legal issues (such as the definition of “for cause”), likely with the Supreme Court not disturbing the District Court’s injunction and thus with Governor Cook remaining in office.

In that event, the case will likely reappear on the Court’s docket once the case has gone through the lower courts; Clement’s colloquy with Justice Kagan offered several ways the Court could rule in her favor as well without a broader opinion or even without having to give a definitive understanding of the “for cause” standard. Alternatively, the Court could simply rule now and end the case, preempting further litigation and providing greater certainly and at least some measure of continued independence for the Federal Reserve in making monetary policy.