First Victory for Fed's Cook Against Trump

NORTH AMERICA
01.10.25 efsyn.gr

Lisa Cook, a member of the Federal Reserve's Board of Governors, will remain in her position at least until January 2026, as decided by the U.S. Supreme Court.

Last August, U.S. President Donald Trump announced the dismissal of Cook, an action that constituted a clear attack on the central bank's independence. Cook subsequently stated that she would sue the Trump administration over its decision to fire her based on unconfirmed allegations of mortgage fraud.

Now, the U.S. Supreme Court (where conservative justices hold the majority) announces that it refuses to hear the case under the expedited procedure and states that it will hear the arguments of both sides in January 2026. This is clearly a first victory for Cook and the supporters of the central bank's independence, who believe that if Cook were temporarily removed without the issue being adjudicated, it would open the door wide for Trump to fire any Fed governor, using a controversial justification.

The issue of Cook's dismissal broadly concerns the limits of presidential power against an independent institution not controlled by the White House. When the Fed was established in 1913, Congress passed the Federal Reserve Act, which stipulates that a president can only dismiss a governor for "cause," without specifying what that might be.

Cook's lawyers consider the matter of her mortgages to be a pretext to fire her and replace her at the Fed with a governor aligned with Trump.

A group of 18 former Fed executives, Treasury Secretaries, and other officials who served under both Republican and Democratic presidents urged the Supreme Court not to allow Cook's dismissal. This group includes three former Fed Chairs: Janet Yellen, Ben Bernanke, and Alan Greenspan. In their letter to the court, they point out that the dismissal would threaten the Fed's independence and undermine public confidence in the institution.