The Supreme Court appeared unlikely Tuesday to allow President Donald Trump to fire Federal Reserve board member Lisa Cook, raising questions about the extent of presidential power over the nation’s central bank and the independence of the Fed’s monetary policy decisions.
During oral arguments in Washington, D.C., on Jan. 21, 2026, justices from across the ideological spectrum expressed skepticism about the Trump administration’s position that the president can immediately remove Cook without providing her notice or an opportunity to challenge the allegations against her. Both Cook and Federal Reserve Chair Jerome Powell attended the proceedings.
Trump fired Cook from the Fed in August 2025, posting a letter on Truth Social alleging she committed mortgage fraud by designating both a house in Michigan and a condo in Atlanta as her primary residence when taking out loans. Cook denies the mortgage fraud allegations. Bank documents appear to contradict the fraud claim.
The case has taken on heightened significance as Powell is also under investigation by the Justice Department. The White House says Trump did not direct the Powell investigation. Trump appointee Jeanine Pirro is conducting the investigation, which relates to a $2.5 billion renovation of Fed headquarters and Powell’s statements to Congress about the project.
Under the Federal Reserve Act, Trump can only fire Cook for cause. Fed members serve 14-year terms and can only be fired for cause, a protection designed to insulate monetary policy from short-term political pressures. President Joe Biden first appointed Cook to the Fed in 2022, then reappointed her to a new 14-year term in 2023 that extends to 2038.
U.S. District Judge Jia Cobb issued an order allowing Cook to stay at the Fed while her challenge to the firing continued. The Supreme Court declined to allow immediate Cook removal in October and scheduled oral arguments for January, 2026.
During nearly two hours of argument, Justice Brett Kavanaugh questioned what harm additional process would cause. “What’s the fear of more process here?” Kavanaugh said, suggesting that providing notice and hearing would strengthen Fed independence rather than weaken it. He warned that allowing removal without review would “shatter” Fed independence.
Justice Amy Coney Barrett appeared to agree, questioning why the administration spent significant time litigating the case rather than holding a hearing to demonstrate cause for Cook’s removal. Chief Justice John Roberts questioned whether an inadvertent mistake qualifies as cause for removal, noting the allegations were contradicted by other documents in the record.
Justice Ketanji Brown Jackson pressed on the factual development needed in the case, while Justice Sonia Sotomayor also raised concerns about the administration’s position. Justice Clarence Thomas, however, expressed sympathy for the Trump administration’s argument that Congress could have explicitly required notice and hearing procedures if it wanted such protections.
Justice Samuel Alito challenged Cook’s attorney Paul Clement on what minimum procedures would be required, calling his “sliding scale” approach unhelpful. Justice Neil Gorsuch explored hypothetical scenarios about what kind of meeting or process might satisfy due process requirements.
Solicitor General D. John Sauer, representing the Trump administration, argued that Cook was not entitled to notice and a hearing before removal. He contended that deceit or gross negligence by a financial regulator in financial transactions should constitute cause for removal, arguing it sends the wrong message for someone with such allegations to set interest rates.
Clement, representing Cook, emphasized that the Federal Reserve is a uniquely structured entity with a distinct historical tradition. He argued that adopting the administration’s view would reduce the removal restriction to at-will employment, undermining the independence Congress intended when creating the Fed as an independent institution.
The Federal Reserve plays a critical role in the U.S. economy, with responsibility for setting monetary policy to maintain price stability and maximize employment. Its independence from direct political control has long been considered essential to making decisions based on economic data rather than short-term political considerations. Central bank independence is a hallmark of developed economies and is widely viewed by economists as crucial for maintaining credibility in financial markets.
The case intersects with broader questions about presidential power over independent agencies. Since taking office in January 2025, Trump has removed members of the National Labor Relations Board and moved to fire Federal Trade Commission member Rebecca Slaughter. The Supreme Court heard arguments in December in Slaughter’s case, examining whether for-cause protections for FTC members violate constitutional separation of powers.
Powell’s term as Fed chair ends in May 2028, though he could remain as a board member beyond that date. Trump originally appointed Powell to lead the Fed in 2017 during his first term, but has frequently criticized Powell and the Fed for not lowering interest rates more aggressively.
The Federal Reserve eventually lowered rates at meetings in the fall of 2025 after maintaining higher rates to combat inflation. The central bank’s interest rate decisions affect borrowing costs throughout the economy, influencing everything from mortgage rates to business investment to consumer spending.
The Supreme Court’s eventual ruling could have far-reaching implications for the structure of the federal government and the balance of power between the executive branch and independent agencies. The justices must weigh the president’s constitutional authority to remove executive branch officials against Congress’s power to structure agencies and impose limits on removal.
A decision is expected by the summer of 2026, when the court typically issues its most significant rulings before the term ends. The outcome will likely provide clarity on what procedures must be followed before an independent agency member can be removed and what constitutes adequate cause for removal under federal law.