President Donald Trump attempted to fire Federal Reserve Governor Lisa Cook, claiming misconduct, but legal experts state his action lacks legal basis due to the independent nature of the Federal Reserve and recent court rulings affirming its autonomy. This move raises significant questions about presidential powers over Fed appointments and the ongoing legal battles surrounding it, especially in light of a Supreme Court stay that protected Fed independence. Cook has publicly refused to resign, asserting her legal right to remain in her position amidst the controversy. The situation underscores the broader tensions between presidential authority and Federal Reserve independence, with experts noting historical precedents and potential legal ramifications for future governance and policymaking.

Why It Matters

The Supreme Court issued a narrowly tailored order on May 22, 2025, granting a stay that allowed the administration to remove members of the National Labor Relations Board (NLRB) and the Merit Systems Protection Board while signaling that the Fed was independent and distinct from those agencies.

The Federal Reserve Act provided that governors serve 14-year terms and could be removed only "for cause," a statutory standard that had rarely been litigated in the context of Fed membership but has become central to the legal battle now escalating between Trump and Cook.

Justices wrote the following in their May order: "The Federal Reserve is a uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States."

But Trump has attempted to defy past legal precedent and pointed at decades-old Court cases as a potential workaround to remove Fed Chair Jerome Powell, whom the president has continually ridiculed for perceived shortcomings including not lowering interest rates.

Earlier this month, Trump publicly considered a "major lawsuit" against Powell "because of the horrible, and grossly incompetent, job he has done in managing the construction" of two of the Fed's historic buildings part of a broader multi-billion-dollar modernization project.

What To Know

Cook, who Trump alleged to have committed mortgage-related misconduct resulting in her firing, told The Associated Press on Monday that she would not resign from the Fed's seven-member board.

"President Trump purported to fire me 'for cause' when no cause exists under the law, and he has no authority to do so," Cook said. "I will not resign."

The Federal Reserve has been the ire for past presidents, and Trump may attempt to take advantage of past rulings he views as unconstitutional.

As noted in April by Michael Waldman, president and CEO of the Brennan Center for Justice at NYU School of Law, a wave of litigation over presidential removal powers is traced back to the 1935 precedent Humphrey's Executor when President Franklin D. Roosevelt wanted to fire Federal Trade Commission member William Humphrey. The Supreme Court ruled at the time that Roosevelt could not fire Humphrey, who ultimately died in his FTC role while legal matters were still being adjudicated.

Texas-based attorney Jeremy Rosenthal told Newsweek via email on Tuesday that the ruling in May regarding the NLRB puts the conservative-minded Court "in a box." "They said NRLB officers get less protection than, say, Federal Reserve officials who they drew the distinction against," Rosenthal said. "Now they'll probably have to choose whether to pretend they never said what they said, or whether to tell President Trump he can't do something he wants to do—a position they've rarely taken." "But it's not surprising the president is forcing the issue."