The Supreme Court said Wednesday it will let Federal Reserve Governor Lisa Cook remain on the central bank’s board while it prepares to hear arguments over President Donald Trump’s attempt to fire her. They announced they will hear oral arguments in January.
The justices issued a short, two-sentence order with no noted dissents. Until then, Cook will keep her position and participate in policy decisions. That includes at least two more meetings where interest rates may be cut.
Trump fired Cook in August. He accused her of committing mortgage fraud by falsely claiming two different properties in Michigan and Georgia as her primary residence to secure more favorable loan terms. Federal Housing Finance Agency director Bill Pulte referred the case to the Justice Department, and a probe is now underway.
“That the Federal Reserve Board plays a uniquely important role in the American economy only heightens the government’s and the public’s interest in ensuring that an ethically compromised member does not continue wielding its vast powers,” the Trump administration said in its Supreme Court application.
“Put simply, the President may reasonably determine that interest rates paid by the American people should not be set by a Governor who appears to have lied about facts material to the interest rates she secured for herself and refuses to explain the apparent misrepresentations.”
Cook has denied wrongdoing and sued to challenge her removal. She called the move “unprecedented and illegal.” Her lawyers argue the allegations date to before she joined the Fed board. They say the accusations do not constitute valid grounds for dismissal. They also warned that siding with the White House would “eviscerate” the Fed’s independence and turn the central bank into a body “subservient to the President’s will.”
Under the Federal Reserve Act, a president may only remove a governor “for cause.” The law does not define the term. The Trump administration contends the courts have no authority to second-guess the president’s determination.
“Even if Cook’s acts reflect gross negligence, the President expressly determined that her lack of care in making important financial representations provides sufficient cause for her removal because it calls into question her competence and trustworthiness as a financial regulator,” the government wrote.
The Supreme Court’s decision to schedule full arguments rather than rule quickly is an unusual step in emergency cases. These cases are typically resolved within weeks. It is the second time the justices have chosen to hear oral arguments on an emergency application from Trump’s second administration.
The move comes shortly after the Court temporarily allowed Trump to fire Federal Trade Commission Commissioner Rebecca Slaughter. The justices agreed to review his claim that he can dismiss independent agency leaders at will. That case could reshape decades of precedent.
Cook’s case, which will be heard weeks after that dispute in January, presents distinct legal questions. It could have equally significant implications. Trump is the first president to attempt to remove a sitting Federal Reserve governor. The case is being closely watched across Washington and Wall Street.
More than a dozen former Fed chairs, Treasury secretaries, and top White House economic officials from both parties urged the Court to let Cook remain on the board. They warned that allowing her removal could damage confidence in the Fed’s independence and undermine U.S. financial markets.
Cook, who joined the board in 2022, will remain in place for now. With the next Fed meetings scheduled for October and December, she will have a vote on interest rate decisions and enforcement actions before the Court takes up the case. The central bank cut rates for the first time this year in September.
The White House said it expects “ultimate victory” once the justices hear the case. Solicitor General D. John Sauer told the Court that Cook’s challenge represents “improper judicial interference with the President’s removal authority.”