Trump's Legal Push to Reshape Fed Ignites Debate on Presidential Power Limits

Donald Trump’s administration has petitioned the U.S. Supreme Court to permit the president to remove Federal Reserve Governor Lisa Cook from her position, challenging lower court rulings that blocked the dismissal. The request, filed on September 18, 2025, argues that Trump has legal authority to terminate Fed governors for “cause” under the Federal Reserve Act, citing allegations of mortgage fraud involving Cook’s prior property disclosures. The Solicitor General, D. John Sauer, contended that the president’s determination of “cause” is unreviewable and that Cook’s alleged misrepresentations—claiming two properties as primary residences to secure favorable mortgage terms—disqualify her from serving on the central bank’s board [1].

The dispute centers on whether the president’s removal authority extends to misconduct predating a Fed governor’s tenure. Cook, appointed by President Joe Biden in 2022, denies wrongdoing and has sued to block her removal, asserting that Trump lacks legal justification. A federal district court judge, Jia Cobb, ruled in late August that Trump’s firing violated due process and reinstated Cook, emphasizing that the “for cause” provision applies only to misconduct during a governor’s service [2]. The D.C. Circuit Court of Appeals later upheld this decision, allowing Cook to participate in the Fed’s September 18 meeting, which resulted in a 25-basis-point rate cut [3].

The administration’s Supreme Court filing seeks to suspend these rulings, arguing that the lower courts overstepped by reviewing the president’s discretion to define “cause.” Sauer emphasized that the Federal Reserve Act’s broad removal clause does not permit termination for policy disagreements or no reason at all but allows removal for “conduct, ability, fitness, or competence” issues. Trump’s legal team claims Cook’s alleged actions—submitting contradictory mortgage disclosures—undermine her credibility as a financial regulator [1].

The case represents a significant test of presidential power over independent agencies. While Trump has successfully removed leaders of bodies like the National Labor Relations Board and Federal Trade Commission without cause, the Fed’s statutory framework is distinct. The Supreme Court has previously signaled skepticism toward removing Fed governors without cause, given the central bank’s role in insulating monetary policy from political interference [2]. Analysts note that the outcome could redefine the boundaries of executive authority, particularly in agencies designed to operate independently [4].

Cook’s removal would also shift the Fed’s ideological balance. The Board of Governors currently includes four Biden appointees and three Trump nominees. Stephen Miran, Trump’s appointee, joined the board in September after Senate confirmation, but Cook’s presence has maintained a counterbalance to Trump’s economic agenda. The president has criticized the Fed’s recent rate cuts as insufficient, framing the removal as a step toward reshaping the board to align with his policy priorities [4].

The Supreme Court’s decision to grant an emergency stay remains pending, with the administration seeking immediate relief to prevent Cook from participating in future Fed meetings. The broader legal battle could extend beyond this case, influencing future disputes over the removal of unelected officials in agencies with mixed political and technical mandates [1].