Supreme Court seems poised to keep Lisa Cook on Fed board

Supreme Court weighs Trump’s attempt to remove Fed governor Lisa Cook

The U.S. Supreme Court on Wednesday appeared inclined to keep Federal Reserve governor Lisa Cook in her post as it weighed President Donald Trump’s effort to fire her. The justices heard arguments over Trump’s bid to remove Cook based on allegations she committed mortgage fraud, which Cook denies. The case raised questions about whether the administration can use emergency litigation to disrupt the Fed’s structure, which was designed to operate independently from day-to-day politics.

Justice Brett Kavanaugh, one of three Trump appointees on the court, said allowing Cook’s firing to proceed “would weaken, if not shatter, the independence of the Federal Reserve.” At least five other justices also sounded skeptical about the effort to remove Cook from the central bank board.

Cook and Federal Reserve chairman Jerome Powell attended nearly two hours of arguments in the packed courtroom. After the session, Cook issued a statement saying, “For as long as I serve at the Federal Reserve, I will uphold the principle of political independence in service to the American people.”

What the dispute turns on

Solicitor General D. John Sauer told the court that Trump is not asserting he can fire Fed governors at will. Sauer said the government’s case against Cook stems from allegations about claims she made about properties in Michigan and Georgia as “primary residences” in June and July 2021, before she joined the Fed board.

Sauer argued that those mortgage applications were evidence of “gross negligence at best” and that the court should not review the president’s decision while Cook seeks to keep her job. The government also contended Cook has no right to a hearing.

Justice Amy Coney Barrett suggested during questioning that allowing Cook to respond would not be a major procedural step, saying, “just wouldn’t be that big a deal, it seems.”

Cook has denied any wrongdoing and has not been charged with a crime. In a letter that Cook’s lawyer, Abbe Lowell, wrote to Attorney General Pam Bondi in November, Lowell said, “There is no fraud, no intent to deceive, nothing whatsoever criminal or remotely a basis to allege mortgage fraud.” The court heard that Cook’s position, as described through Lowell’s filings, includes arguments that the case largely depends on a “one stray reference” in a 2021 mortgage document that was “plainly innocuous in light of the several other truthful and more specific disclosures.”

Signals from the justices

Chief Justice John Roberts, who also appeared skeptical, suggested it might be “pointless” to send the matter back to lower courts instead of issuing a ruling that would more permanently resolve the dispute. The justices also discussed whether it would be appropriate to allow Cook to remain in office as the litigation proceeds.

Lower-court judges have allowed Cook to continue serving while her challenge to the firing plays out. The justices could deny the emergency appeal Trump is seeking and let the case continue in lower courts rather than reaching a final decision immediately, according to the arguments described during the hearing.

A decision is expected by early summer.

Broader conflict around the Fed

The Supreme Court arguments come as Trump escalated confrontation with the Fed. The U.S. Justice Department has opened a criminal investigation of Powell and served the central bank with subpoenas, the government’s side said and Powell later responded to publicly.

Powell took the rare step of replying to Trump, calling the threat of criminal charges “pretexts” that mask the real reason, which he said was Trump’s frustration over interest rates. The Justice Department said the dispute was ostensibly tied to Powell’s testimony to Congress in June concerning the cost of a massive renovation of Fed buildings.

In addition, during Trump’s first year of his second term, the court generally but not always went along with his requests for emergency actions that sought to counter lower-court rulings against him, including steps involving the president’s discretion to fire heads of other government agencies.

Rate politics and what critics fear

Separate from the courtroom, Trump has pushed for the Fed to cut rates more quickly. During a speech earlier Wednesday in Davos, Switzerland, Trump reiterated his call for the Fed to sharply lower rates and argued that the United States should pay “the lowest interest rate of any country in the world.”

The Fed’s actions were described as slower than Trump wanted. The board cut a key interest rate three times in a row in the last four months of 2025, but the AP report said that trajectory was more gradual than Trump desired. The Fed also suggested it may leave rates unchanged in coming months over inflation worries.

Trump has been dismissive of concerns that cutting rates too quickly could contribute to higher inflation, and he has argued that lower interest rates would help the government borrow more cheaply and reduce borrowing costs for Americans seeking homes, cars and other large purchases.

Critics of the president said the true motivation for trying to remove Cook was to assert control over U.S. interest-rate policy. They said that if Trump succeeded in replacing Cook, he could appoint someone of his choosing and gain influence over the Fed board. The case is being closely watched by Wall Street investors, with potential implications for financial markets and the broader U.S. economy.