Federal Reserve governor Lisa Cook emerged as the victor in Monday's Supreme Court ruling blocking President Trump's attempt to fire her. Arguably the biggest winner, however, is Kevin Warsh, the man Trump picked to lead the central bank.
Warsh, who became chairman in May, enters his second month at the Fed with the question that hung over his predecessor's final months -- whether a president can fire Fed governors for cause on contested grounds -- resolved in the central bank's favor.
The decision gives Warsh more room to operate independently of a president who badgered former Chair Jerome Powell to lower rates, and which he continues to favor. With congressionally imposed removal protections reaffirmed by the Supreme Court, the president's ability to pressure the new chair by threatening to fire him or replace governors around him is now sharply constrained.
"The more political support the institution, and therefore Warsh, enjoys outside the Oval Office, the better," said Mark Spindel, an investment manager and co-author of a history of the central bank's relationship with Congress and the White House. "Enabling the president to repopulate the board with loyalists opens up all sorts of cans of worms. It would upend Warsh's ability to focus on the mandate, the committee and his legacy."
The interference Spindel described isn't hypothetical. In the 1970s, the Nixon White House pressured Arthur Burns to lower rates, including by floating the prospect of expanding the Fed's board to dilute his control.
The institutional protection is notable for being specific to the Fed, reflecting what Chief Justice John Roberts called its "unique historical status and role" in policymaking. In a companion ruling Monday, the court stripped similar removal protections from leaders of other independent agencies.
The Cook ruling doesn't eliminate every tool a president has to pressure the Fed, but forecloses one of the most direct: removing either the chairman or other governors to install loyalists who will outvote him.
The Fed's real independence has always depended on a president accepting that he doesn't control monetary policy. Whether the ruling proves enough depends on what Trump does if and when his own Fed appointee disappoints him. And it depends on whether the 5-4 court ruling -- narrower than some court-watchers expected -- holds in future cases.
The case against Cook has been viewed by many as a pretext because Cook hasn't been charged with a crime. Trump sought to remove her last August after a top housing official, Bill Pulte, said she had misrepresented the occupancy status on one of two properties for which she obtained mortgages in 2021, the year before she became a Fed governor.
Minutes after Monday's ruling came down, Pulte -- recently elevated to acting director of national intelligence -- signaled that the campaign against Cook would continue. In a social-media post, he said he expected Cook would be charged with committing mortgage fraud.
Cook, who was confirmed by the Senate in 2022 after being nominated by former President Joe Biden, has denied wrongdoing. In a statement Monday, she called the case "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."
In his opinion, Roberts noted that had the court accepted too thin a basis for removal, every future Fed governor would have known the bar for removal was low.
"The idea that a president can trump up charges and fire governors on ticky-tack grounds, and then put a bunch of real sock puppets around Warsh -- how does Warsh manage the institution then?" said Spindel.
At his confirmation hearing in April, Warsh declined to defend Cook's position, citing the pending case. He wouldn't say whether he agreed with Justice Brett Kavanaugh that allowing Cook's removal would shatter the Fed's independence from the White House.
The Cook ruling isn't the only instance of other branches stepping in to protect the Fed from presidential interference. In March, a federal judge threw out subpoenas the Justice Department had issued in a criminal probe of cost overruns on Fed building renovations -- a probe Powell publicly characterized as a pretext to pressure the central bank for lower rates.
And the Senate delayed the confirmation vote on Warsh until that investigation had been halted, because one key GOP lawmaker, Sen. Thom Tillis of North Carolina, told colleagues he couldn't support the nominee while the criminal investigation of Powell remained open. Tillis voted for Warsh after the DOJ investigation was halted.
Even if the Supreme Court and the Senate have reinforced the legal guardrails around the Fed, the policy challenge facing Warsh has grown more difficult. Officials are now debating whether stronger economic growth and firmer inflation will require rate increases later this year rather than the cuts Trump wants.
Powell has opted to stay on the Fed's board, a position he is entitled to hold until 2028. The decision is a departure from recent precedent. His public remarks this spring suggested it reflected broader concerns about administration pressure on the central bank, including on the reserve bank presidents who vote on rates alongside governors such as Cook.
Powell's presence could overshadow Warsh. But it also denies Trump a seat he might otherwise fill with someone committed to easier policy who could put Warsh in a bind.
Consider that Stephen Miran, the Fed governor whose seat Warsh took, dissented in favor of easier policy at all six Fed meetings he attended beginning last September. A Trump appointee in Miran's mold would force a choice. Voting against such an appointee and others like-minded committee members would be hard to explain to a president who picked him to deliver looser policy. Conversely, supporting easier policy and getting outvoted by the rest of the committee could neuter Warsh in the eyes of markets and his colleagues.
Write to Nick Timiraos at Nick.Timiraos@wsj.com
(END) Dow Jones Newswires
June 29, 2026 13:37 ET (17:37 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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