Trump Asks Supreme Court to Allow Removal of Fed Governor

The Trump administration on Thursday asked the Supreme Court to allow the president to remove Lisa Cook as a Federal Reserve governor, setting up a key test of presidential power with potentially huge economic consequences.

President Trump has moved aggressively to fire leaders of independent agencies as he seeks to expand executive power and seize control of the federal bureaucracy. His administration has targeted the central bank for months, pressing policymakers to lower interest rates.

The court’s conservative majority has repeatedly allowed Mr. Trump to at least provisionally fire leaders of other agencies without stating a reason, despite statutes passed by Congress designed to ensure political independence. The justices, however, have suggested that the Fed may be uniquely insulated from presidential meddling under the law.

In any case, with the Fed, Mr. Trump said there was “sufficient cause” to fire Ms. Cook.

Justice Department lawyers have argued that the president has the power to fire Ms. Cook because Mr. Trump has alleged that she engaged in mortgage fraud in loan documents she signed before she joined the Fed in 2022. Ms. Cook has not been charged with a crime.

The emergency request to the Supreme Court came three days after an appeals court refused to allow the president to remove Ms. Cook, who was appointed by President Joseph R. Biden Jr., while her lawsuit challenging her firing was pending.

A U.S. District Court judge in Washington on Sept. 9 had temporarily blocked Mr. Trump from ousting Ms. Cook. The judge, Jia Cobb, said Ms. Cook could not be removed for conduct that occurred before she became a Fed governor, nor for claims that do not involve her professional conduct.

The government then filed an emergency request with the U.S. Court of Appeals for the District of Columbia. A divided three-judge panel refused to immediately allow Ms. Cook’s removal, prompting the appeal to the Supreme Court.

In a 2-to-1 decision, the court said tenure protections for the Fed were devised to “assure members of the Board of Governors — and national and global markets — that they do not serve at will and thus enjoy a measure of policy independence from the president,” according to a statement written by Judge Bradley N. Garcia and joined by Judge J. Michelle Childs, both nominees of President Joseph R. Biden Jr.

Judge Gregory G. Katsas dissented, citing the Federal Reserve Act, first enacted in 1913, which states that each member of the Federal Reserve Board of Governors will hold office for 14 years, unless “removed for cause by the president.”

“The president plainly invoked a cause relating to Cook’s conduct, ability, fitness or competence,” wrote Judge Katsas, who was nominated by Mr. Trump. “The allegations against Cook could constitute mortgage fraud if she acted knowingly, and that is a felony offense.”

In court filings, the administration has said that means a governor’s dismissal for that reason is “an unreviewable exercise of the discretion Congress vested” in the president. It has added that the claims against Ms. Cook created doubt that she “can be trusted to act with forthrightness, care and disinterest in managing the U.S. money supply.”

Ms. Cook’s lawyers have warned in court filings that a decision that prevents her from attending this week’s meeting and casting a vote on interest rates could roil the financial markets and undermine the independence of the Fed.

The Supreme Court has recently signaled in other cases that the Fed is distinct from other independent agencies and may deserve special consideration in part because of its central role in the American economy.

In a pair of cases decided on the court’s emergency docket in May, the Supreme Court allowed the Trump administration to fire leaders of the National Labor Relations Board and the Merit Systems Protection Board without stating a reason.

But the court’s order distinguished the Fed, saying it was a “uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States.”