Powell steps into spotlight as Supreme Court weighs Trump's bid to remove Fed's Cook

• Powell's attendance is highly unusual for a Fed chair and comes days after the Trump administration issued subpoenas threatening criminal investigation into Powell himself over a headquarters renovation.
• Cook, appointed by Biden in 2023 to a 14-year term, denies wrongdoing and faces no criminal charges; her lawyers argue the allegations are 'manufactured' pretexts for policy disagreements.
• No president has ever removed a sitting Fed governor in the institution's 112-year history; a ruling for Trump could permanently reshape the Fed's relationship with the White House and trigger economic instability.

Summary

Federal Reserve Chair Jerome Powell will attend Supreme Court oral arguments on Wednesday in a rare public appearance as justices consider President Trump's bid to remove Fed Governor Lisa Cook—a case threatening the central bank's 112-year tradition of independence.

Key Developments

Trump fired Cook in August 2025, citing alleged mortgage fraud related to designating two homes as primary residences on loan documents. Cook denies wrongdoing, faces no criminal charges, and remains in office after a lower court blocked her removal, ruling she had a "substantial likelihood" of winning. The Supreme Court allowed her to stay pending litigation.

Powell's attendance is highly unusual and signals the Fed views the case as existential. His appearance follows recent Trump administration subpoenas to the Fed and threats of criminal investigation into Powell himself over a controversial headquarters renovation.

Legal Question

The case centers on whether a president can remove Fed governors for pre-office conduct or only for actions during service. Trump's lawyers argue pre-office misconduct demonstrates unfitness for a financial regulator. Cook's team contends accepting this rationale would eliminate "for cause" protections, making Fed governors at-will employees subject to political pressure.

Market Implications

No president has ever removed a sitting Fed governor in 112 years. A ruling favoring Trump could fundamentally reshape Fed-White House relations and threaten central bank independence. Former Fed and Treasury officials warn this could trigger economic instability and erode public trust in monetary policy decisions.

The outcome remains uncertain, though the Court's decision to keep Cook in office during proceedings suggests skepticism toward Trump's removal effort. Wednesday's arguments will determine whether Fed independence protections survive.