The justices determined that Fed governor Lisa Cook can retain her position while contesting Trump’s attempt to dismiss her over mortgage fraud accusations, which she denies.
Aside from the Federal Reserve, which manages interest rates, the court ruled that presidents have the liberty to dismiss agency leaders at their discretion, despite existing federal laws mandating justification for such terminations and a 91-year-old ruling that had restricted executive power.
With a majority of six conservative justices, the nine-member court overturned its unanimous ruling from Humphrey’s Executor, which had previously limited presidential powers to dismiss agency board members in order to maintain decision-making free from political influence.
“We hold that such protection from removal is contrary to the separation of powers enshrined in the Constitution,” Chief Justice John Roberts articulated on behalf of the court.
Support for Trump’s position
The court ruled in the matter of Rebecca Slaughter, a former Federal Trade Commission member whom Trump dismissed without justification, despite a federal law requiring cause for such actions. This ruling’s implications extend to other bodies like the National Labour Relations Board, the Merit Systems Protection Board, and the Consumer Product Safety Commission, where Trump has similarly removed board members.
Trump expressed his approval through a post on Truth Social: “It is such an Honor to be the sitting President who won this Historic and Unprecedented Ruling, one of the most important ever given with respect to Presidential Powers,” he wrote.
The court had previously indicated its endorsement of the Trump administration’s stance, allowing Slaughter and members of other agencies to be dismissed while their legal disputes were still ongoing, despite objections from liberal justices.
No prior president attempted to gain control over the agencies overseeing vast aspects of American life, including nuclear energy, product safety, and labor relations. During December arguments in Slaughter’s case, the six conservative justices, three of whom were appointed by Trump, appeared more focused on establishing a lasting ruling than on empowering Trump excessively.
Their discourse mirrored the presidential immunity case in 2024, which allowed Trump to evade prosecution for efforts to overturn his 2020 election loss to Democrat Joe Biden. Justice Neil Gorsuch remarked that the court was crafting a “decision for the ages.”
Justice Sonia Sotomayor dissented, summarizing her concerns live in the courtroom, warning that the ruling could lead to “submission, instability, and even oppression.” She emphasized, “The president, to be sure, emerges with more power than ever before. That power was given to him by six justices on this court, not the people or the Constitution,” Sotomayor stated.
Fed Governor Cook’s case
In Cook’s case, the court voted 5-4 to reject the Trump administration’s bid to remove her from her position immediately. The majority included Roberts, Justice Brett Kavanaugh, and the three liberal justices.
Roberts noted that allowing Cook to be dismissed at this moment “would permit the President to remove a Federal Reserve member at any time, for any reason, without prior notice and without judicial review thereafter. That would reduce for-cause protection to little more than at-will employment.” He included a footnote in his opinion indicating that nothing prevents Trump from “trying again” to fire her, as long as she is provided with proper notice and the opportunity to contest it.
Trump indicated he might take Roberts up on this, stating on Truth Social that “we will take appropriate action immediately to make sure that someone who has committed wrongdoing will not be making vital decisions concerning the Welfare of the United States of America!” The court affirmed that Cook, nominated by Biden to the Fed’s Board of Governors, can remain in her role at least as long as her lawsuit challenging her firing proceeds. The Trump administration is appealing a lower court decision in her favor.
Additionally, Trump had threatened to dismiss former Federal Reserve chairman Jerome Powell should he not step down at the end of his term in mid-May. Powell has continued as a governor, despite Kevin Warsh succeeding him as chairman.
Judges in lower courts have permitted Cook to remain as one of the seven central bank governors.
Critics assert that Trump’s true aim in attempting to fire Cook is to gain control over US interest rate policy. If he succeeds in replacing Cook, the first Black woman to serve as a Federal Reserve governor, he could appoint someone aligned with his views and secure a majority on the Fed’s board. The outcome of this case is being closely monitored by Wall Street investors and may significantly impact financial markets and the US economy.
Cook stated that her case was “never about mortgage documents signed years before I became a Federal Reserve governor.” She described it as an effort to remove her on a fabricated pretext due to her refusal to yield to political pressure, emphasizing that her focus remains on setting interest rates based solely on what would best serve the American public. “That is the most fundamental obligation of a Federal Reserve governor,” Cook concluded in her statement.
Trump’s confrontation with the Fed
Trump has downplayed concerns that rapidly lowering rates could spur inflation. He advocates for substantial cuts so the government can borrow more economically and to help Americans face lower borrowing costs for major purchases, hoping to counteract negative public sentiment regarding his economic management.
The Fed has maintained its key rate this year, yet there is mounting discussion among policymakers about the threat of persistently high inflation, with the possibility of an increase in its benchmark rate by year-end or maintaining the current rate.
While Cook’s case was under consideration by the Supreme Court, Trump intensified his confrontation with the Fed. The Justice Department initiated a criminal investigation into Powell and issued subpoenas to the central bank.
This investigation concluded in late April. The announcement removed a significant hurdle to the confirmation of Warsh as Powell’s successor.
The allegations against Cook stem from claims that she designated two properties in Michigan and Georgia as “primary residences” in June and July 2021, prior to her appointment to the Fed board. Such designations can lead to a lower mortgage rate and smaller down payment compared to declaring one as a rental or second home.
Solicitor General D. John Sauer noted in January that these applications demonstrate “gross negligence at best” and provide Trump reason to terminate her. He argued that courts should not interfere with his decision and that Cook has no entitlement to a hearing.
Cook has denied any misconduct and has not faced criminal charges.
