Federal Reserve Governor Lisa Cook leaves the U.S. Supreme Court on Jan. 21, 2026 in Washington, D.C, after the court heard oral arguments in Trump v. Cook. (Photo by Kevin Dietsch/Getty Images)

WASHINGTON — U.S. Supreme Court justices across the political spectrum appeared skeptical of President Donald Trump’s swift, informal dismissal of Federal Reserve Board Governor Lisa Cook, and his effort to influence the independent central bank that governs monetary policy in the United States.

The oral arguments Wednesday drew a high-profile appearance in the courtroom of Federal Reserve Chair Jerome Powell — now a target of a Department of Justice investigation. For months prior to the federal probe, Trump has threatened to fire Powell if the chair did not quickly lower interest rates.

For two hours, the justices heard arguments over whether Cook could remain on the board, as a lower court ruled, while litigation continues examining if Trump violated a “for cause” removal statute when he fired her over social media in late August. 

Trump alleged in an Aug. 25 letter posted to his Truth Social platform that Cook committed financial fraud by lying on mortgage loan documents. Trump declared he had “sufficient cause” to remove Cook based on alleged “deceitful and potentially criminal conduct in a financial matter.”

Under the Federal Reserve Act, the president can only remove board governors “for cause” — as designed by Congress in an effort to preserve the central bank’s independence. 

Trump claims his removals of members of independent government agencies are not reviewable by the courts.

Cook has denied any wrongdoing and challenged the president, the board and Powell, essentially arguing in court that an “unsubstantiated allegation about private mortgage applications,” submitted prior to her Senate confirmation, does not amount to cause for removal. Cook also argued that Trump denied her due process in not giving her notice or a chance to respond to his allegations.

Cook, an appointee of former President Joe Biden, has continued to perform her board duties, without interference from Powell.

Alito questions ‘hurried manner’ of firing

During lengthy questioning of U.S. Solicitor General John Sauer, Justices Amy Coney Barrett and Ketanji Brown Jackson asked what the risk would be in allowing Cook to remain in her job while the administration made its case to the lower courts.

“The question is: What is the harm of allowing that injunction to remain, because she’s in office now and would just continue?” Brown asked.

Sauer, Trump’s former personal defense lawyer, said the administration asserts “grievous, irreparable injury to the public perception, to the Federal Reserve, of allowing her to stay in office.”

“Do you have evidence related to the public perception, or is this just the president’s view?” Jackson, a Biden appointee, pressed back.

Sauer said the evidence regarding Cook’s two separate mortgage applications was contained in Trump’s “dismissal order,” referring to the letter posted on social media. 

Moments later, Brown asked if Cook was “given the opportunity in some sort of formal proceeding to contest that evidence or explain it?”

“Not a formal proceeding. She was given an opportunity in public,” Sauer said.

“In the world? Like she was supposed to post about it, and that was the opportunity to be heard that you’re saying was afforded to her?” Brown asked.

“Yes,” Sauer replied.

Justice Samuel Alito, one of the high court’s most conservative members, asked Sauer why the removal had to be handled “in such a hurried manner.”

“You began by laying out what you claim to be the factual basis for the for-cause removal, but no court has ever explored those facts. Are the mortgage applications even in the record in this case?” asked Alito, who was appointed to the court under President George W. Bush.

“I know that the text of the social media post that screenshots the mortgage applications is in the record. I don’t recall if the paperwork itself was in the record,” Sauer said.

Federal Reserve independence

Over several minutes of back-and-forth, Justice Brett Kavanaugh pressed Sauer on the importance of the Federal Reserve’s independence.

“Let’s talk about the real world downstream effects of this. Because if this were set as a precedent, it seems to me — just thinking big picture, what goes around, comes around — all the current president’s appointees would likely be removed for cause on Jan. 20, 2029, if there’s a Democratic president, or Jan. 20, 2033,” argued Kavanaugh, who was appointed during Trump’s first term.

“We’re really at, at will removal. So what are we doing here?” he asked.

“I can’t predict what future presidents may or may not do,” Sauer replied.

“Well, history is a pretty good guide. Once these tools are unleashed, they are used by both sides, and usually more the second time around,” Kavanaugh said.

Kavanaugh later challenged Cook’s lawyer, Paul Clement, over whether his argument was “tilting the balance too far the other direction from where the solicitor general is.”

Clement responded, “This is a situation where Congress, political animals, one and all, knew better than anyone that the short-term temptations to lower interest rates and have easy money was a disaster in the long term, but was going to be irresistible. 

“And so they tied their own hands by taking the Fed out of the appropriations process, and they tied the president’s hands,” the Alexandria, Virginia-based attorney said. 

In a statement following arguments, Cook said the case is “about whether the Federal Reserve will set key interest rates guided by evidence and independent judgment or will succumb to political pressure.”

“Research and experience show that Federal Reserve independence is essential to fulfilling the congressional mandate of price stability and maximum employment. That is why Congress chose to insulate the Federal Reserve from political threats, while holding it accountable for delivering on that mandate. For as long as I serve at the Federal Reserve, I will uphold the principle of political independence in service to the American people,” Cook continued in the statement.

Regulating interest rates — to cool inflation or stimulate the economy — is one tool the central bank uses to accomplish its dual mandate on employment and price stability.

Subpoena issued

The arguments occurred just a dozen days after Powell received a federal grand jury subpoena as part of a Department of Justice probe into allegations that he lied to Congress about multi-year renovation costs to the central bank’s District of Columbia headquarters.

The revelation of a federal investigation of Powell ignited sharp criticism, even from some Republicans. 

Powell alleged in a rare video statement that the administration’s “unprecedented action should be seen in the broader context of the administration’s threats and ongoing pressure.”

He continued, “The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the president.”

Trump first nominated Powell in 2017 to head the Federal Reserve, for a four-year term that began in February 2018. Biden reappointed him in 2021, and Powell received overwhelming support in an 80-19 Senate confirmation vote.

Wednesday’s arguments also came less than two months after the Supreme Court heard arguments in Trump’s firing of another member of an independent federal agency, Federal Trade Commissioner Rebecca Slaughter.

Federal Reserve Chair Jerome Powell speaks during a press conference following the Federal Open Markets Committee meeting at the Federal Reserve on Dec. 10, 2025 in Washington, D.C.  (Photo by Chip Somodevilla/Getty Images)

WASHINGTON — President Donald Trump’s feud with Federal Reserve Chairman Jerome Powell has escalated into a Department of Justice investigation, raising alarm bells among some Republicans in the Senate, where Trump will need broad backing from GOP lawmakers to get his choice for the next Fed chairman approved after Powell’s term ends in May. 

Retiring North Carolina Sen. Thom Tillis, who sits on the narrowly divided Banking Committee that will hold hearings on the next nominee, wrote in a statement he won’t approve anyone to fill Powell’s seat if Trump or administration officials try to further erode its independence. 

“If there were any remaining doubt whether advisers within the Trump Administration are actively pushing to end the independence of the Federal Reserve, there should now be none,” Tillis wrote. “It is now the independence and credibility of the Department of Justice that are in question.”

Tillis added he plans to “oppose the confirmation of any nominee for the Fed—including the upcoming Fed Chair vacancy—until this legal matter is fully resolved.”

Powell fights back in a video

Trump has criticized Powell repeatedly since retaking the Oval Office in January, pressing him to reduce interest rates faster and signaling he wanted to fire him. 

Powell said in a video released this weekend that Justice Department officials on Friday “served the Federal Reserve with grand jury subpoenas, threatening a criminal indictment related to my testimony before the Senate Banking Committee last June.”

Powell alleged the DOJ investigation is not purely about oversight of the multi-year renovation project at the Fed’s offices in Washington, D.C., but “a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the president.”

“This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions—or whether instead monetary policy will be directed by political pressure or intimidation,” Powell said.

Trump first nominated Powell to be chairman of the Federal Reserve in November 2017 for a four-year term that began in February 2018, writing in a statement that Powell had “demonstrated steady leadership, sound judgment, and policy expertise.”

“Mr. Powell will bring to the Federal Reserve a unique background of Government service and business experience,” Trump wrote. “He previously served as Under Secretary at the Department of Treasury in the administration of President George H.W. Bush. Mr. Powell also has nearly three decades of business experience.”

The Senate voted 84-13 in January 2018 to confirm Powell to the role. 

President Joe Biden re-nominated Powell in November 2021 for another four-year term that began in May 2022 after the Senate voted 80-19 to confirm him for a second time. 

Tillis leverage on committee

Trump hasn’t said publicly whom he will nominate to succeed Powell as Fed chairman, but whoever he picks will need to move past the Senate Banking Committee in order to receive a confirmation vote on the floor and actually take on the role. 

The Banking Committee holds 13 Republicans and 11 Democrats, giving Tillis considerable leverage to block any Trump nominee from advancing if all of the Democrats on the panel also vote against reporting that person to the floor.

Massachusetts Democratic Sen. Elizabeth Warren, ranking member on the committee, wrote in a statement that “Trump is abusing the authorities of the Department of Justice like a wannabe dictator so the Fed serves his interests, along with his billionaire friends.”

“As Donald Trump prepares to nominate a new Fed Chair, he wants to push Jerome Powell off the Fed Board for good and install another sock puppet to complete his corrupt takeover of America’s central bank,” Warren wrote. “This Committee and the Senate should not move forward with any Trump nominee for the Fed, including Fed Chair.”

Chairman Tim Scott, R-S.C., had not released any public statements about the Department of Justice investigation into Powell as of Monday morning. 

Murkowski sees ‘attempt at coercion’

Alaska Republican Sen. Lisa Murkowski, who isn’t on the committee, released a written statement after speaking with Powell on Monday morning, saying “it’s clear the administration’s investigation is nothing more than an attempt at coercion.” 

“If the Department of Justice believes an investigation into Chair Powell is warranted based on project cost overruns—which are not unusual—then Congress needs to investigate the Department of Justice,” Murkowski wrote. “The stakes are too high to look the other way: if the Federal Reserve loses its independence, the stability of our markets and the broader economy will suffer. My colleague, Senator Tillis, is right in blocking any Federal Reserve nominees until this is resolved.”

Senate Minority Leader Chuck Schumer, D-N.Y., wrote in a statement the Justice Department’s actions represent “the kind of bullying that we’ve all come to expect from Donald Trump and his cronies.” 

“Anyone who is independent and doesn’t just fall in line behind Trump gets investigated,” Schumer wrote. “Jay Powell and the Fed aren’t the reason Trump’s economy and his poll numbers are in the toilet. If he’s looking for the person who caused that he should look in the mirror.”

Former Federal Reserve chairmen, Treasury secretaries and White House economic advisers released a written statement that the Fed’s “independence and the public’s perception of that independence are critical for economic performance, including achieving the goals Congress has set for the Federal Reserve of stable prices, maximum employment, and moderate long-term interest rates.”

“The reported criminal inquiry into Federal Reserve Chair Jay Powell is an unprecedented attempt to use prosecutorial attacks to undermine that independence,” they wrote. “This is how monetary policy is made in emerging markets with weak institutions, with highly negative consequences for inflation and the functioning of their economies more broadly. It has no place in the United States whose greatest strength is the rule of law, which is at the foundation of our economic success.”

White House press secretary Karoline Leavitt told reporters in the afternoon she didn’t know if Trump had seen Powell’s video but defended the president’s right to denounce the Fed’s actions under his leadership. 

“Look, the president has every right to criticize the Fed chair. He has a First Amendment right, just like all of you do,” Leavitt said. “And one thing for sure, the president has made it quite clear that Jerome Powell is bad at his job. As for whether or not Jerome Powell is a criminal, that’s an answer the Department of Justice is going to have to find out and it looks like they intend to find that out.”