NextFin news, On Thursday, September 18, 2025, the Trump administration formally asked the U.S. Supreme Court to allow the president to remove Federal Reserve Governor Lisa Cook from her position, citing allegations of mortgage fraud committed prior to her appointment.
Lisa Cook, appointed by then-President Joe Biden in 2023 for a 14-year term on the Federal Reserve Board of Governors, faces accusations that she signed mortgage agreements for two different properties within a two-week span in 2021, affirming each as her primary residence for at least one year. These allegations were brought forward by William Pulte, head of the Federal Housing Finance Agency, in a criminal referral to the Department of Justice.
President Donald Trump, who attempted to fire Cook on August 25, 2025, posted a letter on social media stating that there was "sufficient cause to remove" her due to "gross negligence in financial transactions" that questioned her competence and trustworthiness as a financial regulator.
Cook contested her removal in federal court three days later. On September 9, 2025, U.S. District Judge Jia Cobb ruled that Cook should remain on the board during ongoing litigation, finding that the president's removal did not comply with the Federal Reserve Act's "for cause" requirement. Judge Cobb held that removal grounds must relate to conduct during office and that pre-appointment behavior does not constitute valid cause. She also ruled that Cook's Fifth Amendment due process rights were likely violated, as she was not given notice or an opportunity to be heard before removal.
The Trump administration appealed, but the U.S. Court of Appeals for the District of Columbia Circuit upheld Judge Cobb's order by a 2-1 vote, emphasizing Cook's likely success on her due process claim and affirming that Federal Reserve governors are protected from at-will removal.
U.S. Solicitor General D. John Sauer argued before the Supreme Court that the president's authority to remove Federal Reserve governors for cause should not be interfered with by the judiciary. Sauer contended that Cook does not have a property interest in her position and that the president's determination of cause should be final and not subject to court review.
The Federal Reserve, created by Congress in 1913, is the central bank of the United States responsible for monetary policy, including managing interest rates and promoting economic stability. Its Board of Governors members serve staggered 14-year terms and can only be removed by the president for cause, a provision intended to insulate the Fed from political pressures.
This legal dispute arises amid recent Federal Reserve actions, including a September 2025 interest rate cut, the first since December 2024, which Cook supported along with other governors. The case represents a significant test of presidential authority over independent federal agencies and the judiciary's role in reviewing such removals.
The Supreme Court has yet to rule on the Trump administration's request to stay the lower court's order, which currently allows Cook to remain in office while the case proceeds.
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