Supreme Court Seems Skeptical Over Lisa Cook Firing

Update (1238ET): The Supreme Court on Wednesday appeared ready to reject President Trump's request to fire Fed member Lisa Cook as litigation over the issue proceeds in lower courts.

The case, Trump v. Cook, stems from the president's attempt to halt a lower court ruling reinstating Cook after he fired her last year over alleged mortgage fraud. 

During oral arguments, multiple justices seemed skeptical of US Solicitor General D. John Sauer's arguments about the limits of judges' abilities to interfere with the president's power to fire Cook - with some raising questions about whether granting Trump's request would impact the public. 

Trump appointee Justice Brett Kavanaugh was among the skeptics, saying that Trump's position would "weaken if not shatter the independence of the Federal Reserve," while Amy Coney Barrett asked whether the risk to financial markets warranted "caution on our part," though she also suggested she wasn't ready to fully embrace Cook's position.

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The Supreme Court on Wednesday is expected to review the legality of President Donald Trump's firing of Fed Governor Lisa Cook last August over allegations of mortgage fraud.

In a letter to Cook, Trump cited a provision of the Federal Reserve act of 1913 which allows a president to fire members "for cause." 

Cook challenged the firing, and after a lower court reinstated her, Trump asked the Supreme Court to intervene. During today's oral arguments, the justices are expected to probe several legal issues - including whether the mortgage allegations constitute the sort of cause that allows firings under the Federal Reserve Act. 

Of note, Federal Reserve Chair Jerome Powell is planning to attend - which US Treasury Secretary Scott Bessent on Tuesday said would be a mistake. 

Powell's plan to ​attend the court's oral arguments is a potent symbol of the administration's ongoing clash with the Fed following U.S. Department of Justice threats to pursue a criminal investigation of him. Powell called the threat a "pretext" to pressure ‍him over monetary policy. -Reuters

"I actually think that's a mistake," Bessent told CNBC. "If you're trying not to politicize the Fed, for the Fed chair to be sitting there, trying to put his thumb on the ⁠scale, is a real mistake."

The Alleged Fraud

Cook was slapped with a criminal referral on Aug. 15 by Federal Housing Finance Agency (FHFA) chairman Bill Pulte, who alleged that Cook lied on one of her mortgage agreements - specifically representing it as her primary residence. 

As the Epoch Times notes further, ten days later Trump sent a letter to Cook informing her of her termination. “At a minimum, the conduct at issue exhibits the sort of gross negligence in financial transactions that calls into question your competence and trustworthiness as a financial regulator,” he said.

After Cook sued, a federal judge in Washington reinstated her. In a more tentative order, the judge said that Trump probably didn’t have a valid cause for firing Cook.

Under this judge’s interpretation, for Trump to fire Cook, he would have to do so for a reason related to an unfaithful execution of her statutory duties while she was in office. Cook’s alleged fraud took place before she began serving at the Federal Reserve.

Trump has asked the Supreme Court to lift this block while litigation continues in lower courts. Typically, these types of appeals, which come on the emergency docket, are decided without oral argument. In this case, however, the Supreme Court deferred its decision until it heard arguments.

The Justice Department told the Supreme Court in September 2025 that not only was Trump’s cause sufficient, but that courts didn’t have the authority to review his determination of that cause.

Reinstating Officials

Separate from Congress’s phrasing, the power of judges to reinstate fired officials is also under scrutiny in both Cook’s case and another case that was heard in December 2025.

For months, lower court judges have been reversing Trump’s firings of high-level bureaucrats. In response, the Trump administration argued that doing so was overstepping judicial authority and that the more appropriate remedy to illegal firings was back pay.

The Supreme Court is expected to address that issue in Trump v. Slaughter, which focused on the president’s ability to fire members of the Federal Trade Commission.

It’s unclear how they will rule, and they didn’t focus much on the issue during oral argument on Dec. 8, 2025. But in its emergency docket decisions, the Supreme Court has indicated some sympathy for Trump’s position.

Cook’s case is unique for multiple reasons, including that it raises questions about whether officials have a constitutional right to their positions in the federal government. In a briefing to the Supreme Court, Cook cited the Fifth Amendment, which says the government cannot take away someone’s property without due process.

The lower court in Washington said that Cook had a property interest in her position and that Trump failed to provide the necessary due process before removing her. Specifically, the judge said that Trump needed to provide some kind of notice and hearing for Cook.

In response, the Justice Department noted that Trump waited five days before dismissing her after notifying her of the charges. Solicitor General D. John Sauer also denied that offices like Cook’s were property and that requiring a notice and hearing would “wreak havoc on sensitive presidential decision-making.”

Federal Reserve Independence

What also makes Cook’s case unique, and what may give her an edge over other federal officials, is how the Supreme Court views the Federal Reserve’s independence.

Last year, a majority of the justices temporarily allowed Trump to remove the heads of two labor boards who had tried to compare their agencies to the Federal Reserve. Allowing Trump’s firings, which overrode similar laws restricting removals, would effectively call into question the independence of the Federal Reserve.

A majority of the justices rejected this comparison, stating 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.”

Cook has referenced that language while warning about the purported implications of Trump’s firing. Her attorneys said in September 2025 that the Supreme Court’s earlier recognition of the Fed’s independence “would have little meaning if a ‘for cause’ restriction gave the President unreviewable discretion to simply deem any governor ‘unfit to serve’ based on anything he deems ’misconduct.'”

Allowing Trump to fire Cook, they said, “would sound the death knell for the central-bank independence that has helped make the United States’ economy the strongest in the world.”

Trump, meanwhile, has underscored the nature of his authority under Article II of the Constitution, which vests the federal government’s executive power in the president.

“Article II allows the President to determine what process to follow when removing executive officers, and courts cause irreparable harm to the separation of powers when they wrongly usurp that authority,” the Justice Department said in its brief.