Trump v. Cook: Firing a Federal Reserve Governor for Cause

The Supreme Court case Trump v. Cook asks whether President Donald Trump could fire Federal Reserve Governor Lisa Cook in August 2025 over pre-office mortgage allegations, and more broadly whether a president’s decision to remove a Fed governor “for cause” is subject to any judicial review at all. Cook remains on the Board under a preliminary injunction while the Court, which heard argument on January 21, 2026, weighs a decision expected by summer 2026.¹ Fed Chair Jerome Powell has called it “perhaps the most important legal case in the Fed’s 113-year history.”²

What Triggered the Firing

On August 25, 2025, Trump moved to remove Cook from the Federal Reserve Board of Governors. The administration relied on allegations raised by Federal Housing Finance Agency director Bill Pulte that Cook had designated both a house in Michigan and a condominium in Georgia as her “primary residence” within roughly two weeks of each other on 2021 loan applications, potentially to secure better mortgage terms.³ Trump called the alleged conduct “gross negligence” and “potentially criminal.”⁴

Cook denied wrongdoing. Her attorneys called the discrepancies a “clerical error” and said Pulte had “cherry-picked” incomplete document snippets while ignoring a government questionnaire in which Cook listed the Michigan property as primary and the Georgia home as secondary.⁵ On August 28, 2025, Cook sued in federal court in Washington, D.C., arguing the removal violated the Federal Reserve Act and her Fifth Amendment right to due process.³

The Justice Department opened a criminal investigation into the allegations. As of November 2025, no charges had been filed.⁵ Former FHFA officials and outside experts described Pulte’s direct role in making the referral as “bizarre” and “unusual,” noting that criminal referrals at the agency typically originate from its independent Office of Inspector General. Pulte declined to explain how the FHFA obtained Cook’s mortgage documents, saying only that he had received a “tip.”⁶

The Statute at the Center of the Case

The Federal Reserve Act provides that governors serve fourteen-year terms “unless sooner removed for cause by the President.”⁷ The statute does not define “for cause.” It also spells out no procedures for notice or a hearing before removal. Those two silences are what the case turns on.

Cook was nominated by President Biden in 2022 and reappointed in September 2023 to a term running through January 2038.⁸

How the Case Moved Through the Lower Courts

On September 9, 2025, U.S. District Judge Jia Cobb issued a preliminary injunction keeping Cook in her seat while the case proceeded. Cobb found that Cook had made a “strong showing” that the attempted removal violated the Federal Reserve Act’s “for cause” provision, reading the statute to limit removals to grounds concerning “a Governor’s behavior in office and whether they have been faithfully and effectively executing their statutory duties.” She also found the removal “likely violated Cook’s procedural rights under the Fifth Amendment’s Due Process Clause.”⁹

On September 15, 2025, a divided panel of the D.C. Circuit refused to stay the injunction. Judges Bradley Garcia and J. Michelle Childs held that the government “does not dispute that it failed to provide Cook even minimal process before she was purportedly removed” and that Cook held a protected property interest in her fourteen-year term. Judge Gregory Katsas dissented, arguing that the president has broad authority to define “cause” and warning that the injunction “would enable a potentially compromised Governor to engage in significant governmental action.”¹⁰

On October 1, 2025, the Supreme Court declined to lift the injunction immediately, deferred the stay question, and set oral argument for January 2026.¹¹

The Trump Administration’s Argument

Solicitor General D. John Sauer advanced three main positions. First, that “for cause” is broad enough to include “deceit or gross negligence” by a financial regulator in a financial transaction, even one that occurred before the official took office. Second, that because the statute is silent on procedure, no notice or hearing is required. Third, and most sweepingly, that the president’s determination that cause exists is not subject to judicial review at all.¹² The government also argued that Cook has no constitutionally protected property interest in her seat and that judicial reinstatement of an executive officer is an improper remedy.¹³

At argument, the administration conceded one point of significance: it agreed that “the Fed is different at least for purposes of this case and that we can’t remove somebody just for policy disagreements.”¹²

Cook’s Argument

Cook is represented by Paul D. Clement, who argued that the “for cause” standard carries both “substantive and procedural bite.”¹⁴ On substance, Clement contended that pre-office mortgage allegations do not meet any recognized definition of cause, whether framed as “inefficiency, neglect of duty, or malfeasance in office” under Humphrey’s Executor v. United States (1935).¹³ On procedure, he argued Cook was entitled to at least three things before removal: notice of the charges, an opportunity to present evidence, and a decision-maker who had not prejudged the outcome. On that last point, Clement pointed to the president’s Truth Social post demanding Cook “resign or be fired” as “indisputable evidence that the president prejudged the matter.”

Clement also framed the institutional stakes. If the removal restriction is “toothless,” he told the Court, there is “no rational reason to go through all the trouble of creating this unique, quasi-private entity.”¹²

What Happened at Oral Argument

The January 21, 2026, argument suggested a Court broadly skeptical of the administration’s position. Justice Brett Kavanaugh said that allowing the president to fire a governor “with no process, no remedy, and a low bar for ’cause’ determined solely by the president” would “shatter” the Fed’s independence. Chief Justice John Roberts and Justice Elena Kagan raised concerns that if the executive’s cause determination could not be reviewed and reinstatement was unavailable, the removal restriction would be “non-effectual.”¹²

Justice Clarence Thomas pushed the other way, asking why Congress had not written explicit notice-and-hearing procedures into the Act if Fed independence was so central. Clement responded that the legislators who drafted the statute used “for cause” interchangeably with “inefficiency, neglect of duty, and malfeasance in office,” language the Court has historically read as requiring procedural protections. Justice Samuel Alito called Clement’s proposed “sliding scale” for removal procedures “extraordinarily unhelpful.”¹²

Powell attended the argument in person, an unusual step for a sitting Fed chair. He defended his attendance by noting it would have been “difficult to explain his absence” given the stakes, and cited former chair Paul Volcker’s attendance at a 1985 Supreme Court case. Treasury Secretary Scott Bessent publicly called Powell’s attendance a “real mistake”; Powell declined to engage, saying, “I don’t respond to comments by other officials.”²

Why the Fed Is Treated Differently From Other Agencies

Trump v. Cook is one of several cases in which the administration has challenged for-cause removal protections. The most directly related is Trump v. Slaughter, which involves the March 2025 firing of FTC Commissioner Rebecca Kelly Slaughter and asks the Court directly whether the ninety-year-old Humphrey’s Executor precedent should be overruled. Argument in Slaughter was held on December 8, 2025, and a decision is expected by summer 2026.¹⁵

The Court has already signaled that the Fed occupies a different category. In Trump v. Wilcox (May 2025), the Court granted a stay allowing the president to fire commissioners of the National Labor Relations Board and the Merit Systems Protection Board, reasoning that those agencies “exercise considerable executive power.” But it added a specific caveat: “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,” and the ruling “has no bearing on the constitutionality of for-cause removal protections for members of the Federal Reserve’s Board of Governors.”¹⁶

The practical effect is that even if the Court weakens removal protections for other independent agencies, the Fed’s protections could survive on the Court’s stated view that the central bank is structurally different. Harvard Law professor Daniel Tarullo described this as the Court trying to “thread the needle.”¹⁷ Justice Kagan warned in her Wilcox dissent that the majority’s approach risks “reducing Humphrey’s to nothing and depriving members of the NLRB, MSPB, and many other independent agencies of tenure protections.”¹⁸

What a Ruling Could Do

The Court is reportedly weighing whether to decide directly whether Trump had sufficient cause to fire Cook or to send the case back to the lower courts for further fact-finding on what process she was owed.¹² A ruling for Cook would confirm that a president cannot remove a Fed governor without meeting some substantive standard and providing some process, and that courts can review the decision. A ruling for the administration, especially one holding the president’s cause determination unreviewable, would in practice make the fourteen-year Fed term revocable at will.

Financial markets have already registered the uncertainty. Ten-year-ahead forward swap rates rose to 4.66 percent, their highest level in over a decade, a move analysts have tied in part to concerns about weakened central bank independence.¹⁹ JPMorgan Chase CEO Jamie Dimon warned that interference with the Fed would “increase borrowing rates over time” and raise inflation, with effects felt in mortgages and business investment.²⁰

For now, Cook remains a sitting Federal Reserve governor. The preliminary injunction from September 2025 has not been disturbed, and the Court’s decision is expected by summer 2026.¹

1
Cornell Law Institute. Trump v. Cook, No. 25A312
2
Politico. Powell: Lisa Cook Lawsuit Is the Most Important Legal Case in the Fed’s History
3
NPR. Lisa Cook Lawsuit Against Trump Over Fed Removal
4
SCOTUSblog. Trump v. Cook: An Explainer
5
Banking Dive. Lisa Cook Trump Bondi Letter Mortgage Fraud Allegations
6
The Guardian. Bill Pulte FHFA Referral Mortgage Fraud Lisa Cook
7
Mayer Brown. Supreme Court Orders Oral Argument on President’s Decision to Remove Federal Reserve Governor Lisa Cook
8
Federal Reserve History. Lisa Cook
9
Roll Call. Judge Keeps Cook at Fed as Courts Consider Lawsuit on Her Firing
10
Politico. Appeals Court Denies Trump Bid to Remove Federal Reserve Board Member Lisa Cook
11
Supreme Court of the United States. Docket No. 25A312, Donald J. Trump v. Lisa D. Cook
12
SCOTUSblog. Supreme Court Appears Inclined to Prevent Trump From Firing Fed Governor
13
American Bar Association. Trump v. Cook
14
The New York Times. Supreme Court Fed Lisa Cook
15
SCOTUSblog. Trump v. Slaughter
16
Supreme Court of the United States. Trump v. Wilcox, 605 U.S. (2025)
17
Harvard Law School. Will the Federal Reserve Remain Independent
18
Alliance for Justice. Supreme Court Prepares to Dismantle Independent Agencies
19
Citadel Securities. Fed Independence Is Sacrosanct for Markets
20
OPB. It’s Showdown Time for the Fed’s Independence at the Supreme Court