The Supreme Court on Monday denied President Donald Trump's bid to oust Federal Reserve governor Lisa Cook, a decision that preserves her position and is widely seen as reinforcing the central bank's independence in setting the nation's monetary policy.
In a 5-4 decision, the Court upheld the lower courts' rulings that Cook could continue serving at the central bank as her legal case challenging the termination moves forward.
"The Government has not shown that it is likely to prevail on the legal arguments advanced in its stay application," Chief Justice John Roberts wrote in the majority opinion on Monday.
Further, the Court rejected the government's "halfhearted contention" that Cook received due process. "At minimum, Cook was entitled to some explanation of the evidence at issue, some avenue for a response, and a deadline by which a response would be due," the opinion noted.
"Acceptance of the Government's position would in effect transform the Federal Reserve's for-cause protection into at-will employment -- an interpretive leap out of step with the statute Congress enacted and our Nation's tradition of central banking protected from political interference," the Court said.
Monday's ruling did not decide whether the president may lawfully remove governor Cook for cause. Instead, it rejected the administration's bid to remove the sitting governor while litigation over the merits of the case moves forward.
Trump characterized Monday's ruling as narrow, saying in a social media post that the case was sent back to the district court on a "strictly procedural basis" and vowing to continue seeking Cook's termination.
"We will take appropriate action immediately to make sure that someone who has committed wrongdoing will not be making vital decisions concerning the Welfare of the United States of America!" Trump wrote.
In a contrasting opinion, the Court also ruled on a separate challenge brought by Rebecca Slaughter, who contested Trump's removal of her from the Federal Trade Commission. The justices held that the FTC's "for cause" removal protections violate the Constitution's separation of powers.
"The FTC unquestionably exercises executive power and must therefore be controlled by the Chief Executive," the Court said Monday.
Cook launched her legal battle on Aug. 28 after Trump attempted to remove her from the Fed amid allegations she made false claims on mortgage documents in 2021 that may have secured her more favorable loan terms.
She contended her removal violated her right to due process, and argued the government had not provided sufficient evidence to merit an appropriate "for cause" removal as required.
Both a federal judge and a federal appeals court in Washington, D.C., upheld Cook's tenure, but attorneys for Trump appealed the decision to the Supreme Court's emergency docket last fall. The Court declined to issue an emergency ruling on Trump's bid to sideline Cook, instead requiring both parties submit to oral arguments.
Monday's majority opinion noted that its ruling was "narrow" and largely based on the fact that the president failed to afford Cook the notice and some opportunity to respond before her termination.
"Without such protections, she could not properly dispute the charges the President laid against her," the opinion noted.
Cook said in a statement Monday that she was grateful for the Court's ruling.
"Today's ruling affirms a principle that has underpinned sound economic stewardship for generations: that the Federal Reserve must make all its policy decisions guided by evidence and independent judgment, free from political interference," Cook said.
She added that the Fed's independence is a "bedrock principle" that has guided the central bank since its founding.
"This was never about mortgage documents signed years before I became a Federal Reserve governor," Cook said. "It was an attempt to remove me on a manufactured pretext because I refused to bow to political pressure and continued to set interest rates based only on what would best serve the American people."
The case involves the first purported "for cause" removal of a Fed governor in the central bank's 112-year history. Trump's removal, however, hinges on alleged misrepresentations Cook made on mortgage documents predating her time in office. Cook has denied wrongdoing.
Cook's full 14-year term on the board is set to end in January 2038. She was appointed in 2022 by then-President Joe Biden to fill an unexpired term. She was reappointed in 2023 to her current term.
Federal Housing Finance Agency Director Bill Pulte claimed Cook sought several mortgages in 2021 for homes in Michigan and Georgia that she inaccurately listed as primary residences, thus gaining favorable mortgage terms. Pulte later claimed a third mortgage on a home in Massachusetts was also being investigated.
But the government hasn't produced any evidence that Cook gained favorable rates or other benefits. Additionally, documents reviewed by Barron's indicate that Cook has claimed the Georgia property as a vacation home, rather than the primary property as Pulte alleged.
In addition to contending that the government was likely to succeed on the merits of its case, an argument the majority rejected, Trump's lawyers also attempted to argue that the president's termination decision was not reviewable by the courts. The government also argued that "for cause" is a low bar and that even if Trump's order firing Cook did not show cause, she was not entitled to remain in office while litigation over the termination proceeded. Roberts rejected these arguments for the majority.
"To accept any one of those arguments would in effect transform the Federal Reserve's for-cause protection into at-will employment -- an interpretive leap out of step with the statute Congress enacted and our nation's tradition of central banking protected from political interference," Roberts wrote.
Justice Clarence Thomas, in dissent, argued that the president is likely to succeed on the merits and should therefore be granted his bid to remove Cook.
"The President's removal of Cook complied with the statute regardless of whether he provided notice and a hearing," Thomas wrote.
Roberts acknowledged that the Court did not answer the question of whether the President can remove Cook for cause, saying instead that will depend, in part, on the underlying facts found by the lower courts.
"In this opinion, we have not addressed the facts, as they have yet to be found or analyzed under the relevant legal standards. Rather, we have simply addressed the parties' arguments about the appropriate legal standards under which the facts must be evaluated," he wrote.
The Court's ruling, therefore, will return the case to the district court to decide the merits of the "for cause" removal. In the interim, Cook will remain on the job at the Federal Reserve.
Write to Megan Leonhardt at megan.leonhardt@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
June 29, 2026 15:07 ET (19:07 GMT)
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