Supreme Court case on Trump bid to fire Fed Governor Lisa Cook set for oral arguments

• Cook can only be removed 'for cause' under the 1913 Federal Reserve Act; lower courts ruled alleged mortgage fraud before her appointment doesn't meet this standard for in-office misconduct
• All three living former Fed chairs (Greenspan, Bernanke, Yellen) filed a brief opposing Cook's removal, warning it would 'expose the Federal Reserve to political influences' and undermine monetary policy credibility
• The case comes amid Fed Chair Powell's criminal investigation over building renovation oversight, which Powell claims is retaliation for keeping rates steady against Trump's preferences

Summary: Supreme Court to Hear Trump-Fed Independence Case

The U.S. Supreme Court heard oral arguments Wednesday on President Donald Trump's attempt to fire Federal Reserve Governor Lisa Cook, marking the first time a president has tried to remove a Fed governor. Trump cited allegations from Federal Housing Finance Director Bill Pulte that Cook made false statements on mortgage applications before joining the Fed, which Cook denies.

Key Figures and Facts:

• Cook, appointed by President Biden in 2022 and reappointed in 2023 to a 14-year term, is the first Black woman on the Fed board
• Fed Chair Jerome Powell is under criminal investigation by the U.S. Attorney's Office over the central bank's multi-billion-dollar building renovation project
• Under the Federal Reserve Act of 1913, governors can only be removed "for cause," historically interpreted as malfeasance or dereliction of duty while in office

Legal Developments:

District Court Judge Jia Cobb blocked Cook's removal, ruling the alleged cause predated her Fed tenure. The DOJ appealed unsuccessfully, then escalated to the Supreme Court, arguing the president has "unreviewable discretion" in determining cause for termination.

Market Implications:

The case threatens Fed independence in setting monetary policy. If Cook and Powell were removed, Trump could appoint a board majority, potentially influencing interest rate decisions. Both officials supported maintaining steady rates last year despite Trump's preference for cuts.

Former Fed Chairs Alan Greenspan, Ben Bernanke, and Janet Yellen, along with former Treasury secretaries, filed a brief warning that removing Cook would "expose the Federal Reserve to political influences" and jeopardize the "credibility and efficacy of U.S. monetary policy."

The outcome could fundamentally reshape the relationship between the executive branch and central bank independence.