Supreme Court Rules Federal Reserve Governor Can Remain in Post

The U.S. Supreme Court ruled 5-4 on Monday that Federal Reserve Governor Lisa Cook can continue serving while her lawsuit against her removal moves forward. The court said the president must give a governor an explanation of the evidence and an opportunity to respond before removal.

The opinion stated that accepting the administration's arguments would turn the Federal Reserve's for-cause protection into at-will employment.

Background on the Dispute President Trump removed Cook last August, citing alleged mortgage fraud on loan documents signed before she joined the board. Cook, appointed by former President Biden, denied the allegations and filed suit. Section 10 of the Federal Reserve Act allows removal of governors for cause during their 14-year terms, but the statute does not define the term.

In a separate case decided the same day, the court held that the president has broad authority to remove heads of other independent regulatory agencies. The majority opinion noted that the Federal Reserve occupies a distinct role tied to economic stability and that both the fact and appearance of independence matter.

Cook said after the ruling that the case was an attempt to remove her on a manufactured pretext and that the decision protects the central bank's ability to set policy based on evidence rather than political pressure. The White House did not immediately respond to a request for comment.