Washington– The Supreme Court on Wednesday appeared inclined to keep Federal Reserve Governor Lisa Cook in office, casting doubt on President Donald Trump’s attempt to wrest control of the nation’s central bank.
The justices heard arguments about Trump’s efforts to fire Cook based on allegations that she committed mortgage fraud, which Cook denies. No president has fired a sitting governor in the 112-year history of the Fed, which was structured to be independent of day-to-day politics.
Justice Brett Kavanaugh, one of three Trump appointees to the nation’s highest court, said allowing Cook’s firing to proceed “would weaken, if not destroy, the independence of the Fed.”
At least five other justices on the nine-member court also expressed skepticism about efforts to remove her from office.
Cook and Federal Reserve Chairman Jerome Powell sat for nearly two hours in the crowded courtroom.
“As long as I serve on the Federal Reserve Board, I will uphold the principle of political independence in the service of the American people,” Cook said in a statement issued after the arguments.
Trump’s critics say the real motivation for the attempt to fire Cook is the Republican president’s desire to exercise control over US interest rate policy. If Trump succeeds in firing Cook, the first black woman to serve as Fed governor, he could replace her with his own appointee and gain a majority on the Fed’s board. The issue is being closely watched by investors on Wall Street and could have wide-ranging implications for financial markets and the US economy.
Trump was dismissive of concerns that cutting interest rates too quickly could lead to higher inflation. He wants deep cuts so the government can borrow more cheaply and Americans can pay lower borrowing costs for new homes, cars or other large purchases, as concerns about higher costs have made some voters nervous about his economic stewardship.
During a speech earlier Wednesday in Davos, Switzerland, Trump repeated his call for the Federal Reserve to cut interest rates sharply, saying the United States should pay “the lowest interest rate of any country in the world.”
The Governing Council has cut the key interest rate three consecutive times in the last four months of 2025, but this is slower than Trump wants. The Fed also indicated that it may leave interest rates unchanged in the coming months due to inflation concerns.
The issue before the court is whether Cook can remain on the job while her challenge to the dismissal plays out in court. Lower court judges allowed her to remain in her position as one of seven governors of the central bank. The justices could simply deny the emergency appeal sought by Trump and allow the case to continue in lower courts.
Chief Justice John Roberts, who also appeared skeptical of Trump’s actions, suggested it might be counterproductive to send the case back to lower courts rather than issue a more permanent ruling. With the Cook case under review in the Supreme Court, Trump has dramatically escalated his confrontation with the Fed. The Department of Justice opened a criminal investigation into Powell and sent the central bank subpoenas.
Powell himself took a rare step to respond to Trump, calling the threat of criminal charges “pretexts” that mask the real reason, which is Trump’s frustration over interest rates. The Justice Department said the dispute ostensibly revolves around Powell’s testimony before Congress in June about the cost of a massive renovation of the Fed’s buildings.
In Trump’s first year in office, the justices generally, but not always, granted Trump’s pleas for emergency action to counter lower court rulings against him, including allowing the heads of other government agencies to be removed at the president’s discretion, without claiming they did anything wrong.
But the court sent signals that it was approaching the independence of the nation’s central bank more cautiously, describing the Fed as a “uniquely regulated quasi-private entity.”
Attorney General John Sawyer said that in Cook’s case, Trump is not asserting that he can fire Fed governors at will. Cook is one of several people, along with New York’s Democratic Attorney General Letitia James and Democratic Sen. Adam Schiff of California, who have been charged with mortgage fraud by federal housing official Bill Bolt. They denied the accusations against them.
The case against Cook stems from allegations that she claimed two properties, in Michigan and Georgia, as “principal residences” in June and July 2021, before joining the Fed’s board. Such claims can result in a lower mortgage rate and a smaller down payment than if one were advertised as a rental property or second home.
Sawyer said these requests are evidence of “gross negligence at best” and give Trump a reason to fire her. In any case, he said the court should not review his decision, and Cook had no right to a hearing.
Cook has denied any wrongdoing and has not been charged with any crime. “There is no fraud, no intent to deceive, and absolutely nothing criminal or basis for alleging mortgage fraud,” Cook’s attorney, Abby Lowell, wrote to Attorney General Pam Bondi in November.
Cook specified that her Atlanta apartment would be a “vacation home,” according to the loan estimate she took out in May 2021. On a form for a security clearance, she described it as a “second home.” Lowell wrote that the case against her relied largely on “one stray reference” in a 2021 mortgage document that was “obviously innocuous in light of the many truthful and more specific disclosures” about the homes she purchased.
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