Supreme Court Will Hear Arguments Over Firing of Fed’s Lisa Cook — but Allows Her to Stay on the Job for Now

The high court’s move means Cook, a Biden appointee, is likely to continue to have influence over sensitive interest-rate-setting decisions for months.

Federal Reserve Board of Governors member Lisa Cook listens during an open meeting of the Board of Governors, June 25, 2025, in Washington. (AP Photo/Mark Schiefelbein, File)

Federal Reserve Board of Governors member Lisa Cook listens during an open meeting of the Board of Governors, June 25, 2025. | Mark Schiefelbein/AP Photo

By Josh Gerstein

10/01/2025 02:37 PM EDT

The Supreme Court is allowing Federal Reserve board member Lisa Cook to remain on the job for now, but has agreed to hear arguments on an expedited basis on whether President Donald Trump can fire her over disputed allegations of mortgage fraud.

The justices said Wednesday they will take up the case over Cook’s firing in January, although there’s no guarantee when they will rule.

The high court’s move means Cook, a Biden appointee, is likely to continue to have influence over sensitive interest-rate-setting decisions for months as the legal battle continues.

Federal law allows the president to fire Fed members only “for cause” — a standard that has traditionally been understood to mean malfeasance in office. Trump tried to fire Cook in August, arguing that he has good cause because he has claimed that Cook, before she joined the Fed, inaccurately listed two different homes as “primary residences” on separate mortgage applications. Cook hasn’t been charged criminally or civilly with misconduct, and she has denied committing any fraud.

Last month, Reuters reported on documents that cast doubt on Trump’s claim that Cook committed fraud.

A federal district judge found the firing violated Cook’s rights because she wasn’t given an opportunity to formally contest the fraud claim. That judge allowed her to continue in her job while litigation continued, and a federal appeals court panel agreed, prompting the Trump administration to file an emergency appeal at the Supreme Court.

Rather than ruling on Trump’s appeal right away, the high court took the rare step of scheduling it for oral argument.

In other cases involving Trump’s attempts to fire leaders of executive branch agencies, the Supreme Court has issued interim orders preventing those leaders from staying in their jobs while their cases proceed. But the court did not take the same approach with Cook — a possible signal that the court will adopt a more skeptical view of Trump’s authority to fire her.

No justice indicated any dissent from the court’s brief order scheduling the case for arguments in January. The order gave no explanation for permitting Cook to remain in her post in the meantime.

The order positions Cook to remain on the Fed board through at least two more scheduled rate-setting meetings: one later this month and one in December. She could remain through additional meetings next year if the court rules in her favor or takes a lengthy period to rule after the January arguments.

White House press secretary Karoline Leavitt told reporters at a Wednesday press briefing that the administration is eager for the court to take up Cook’s case in full early next year.

“We have respect for the Supreme Court, but they’re gonna hear the actual case and make a determination on the legal argument in January,” she said. “And we look forward to that because we maintain that she was fired well within the president’s legal authority to do so.”

Abbe Lowell, Cook’s attorney, said in a statement that the court’s order “rightly allows Governor Cook to continue in her role on the Federal Reserve Board, and we look forward to further proceedings consistent with the Court’s order.”

Members of the Federal Reserve Board of Governors normally serve staggered 14-year terms. Cook’s term is scheduled to expire in 2038.

Trump declared in an Aug. 25 letter attached to a social media post that he was firing Cook over allegations that Cook simultaneously declared two properties as her primary residence. Those allegations, Trump wrote, are “sufficient cause” to dismiss her under a law aimed at keeping the Fed insulated from politics.

However, Trump’s move was widely seen as a thinly veiled attempt to shake up the Fed to advance his repeated calls for it to stimulate the economy by cutting interest rates far more aggressively than they have done so. Trump has also threatened to fire Fed chair Jerome Powell.

Trump’s decision to offer any reason at all to support his firing of Cook was unusual, since he has frequently provided no reason or simply referred to vague policy priorities when sacking other officials across the executive branch atop what were once referred to as “independent agencies.” Laws passed by Congress and signed by previous presidents gave those officials some protection against being fired for political reasons. The Trump administration has argued that many of those protections are unconstitutional because they interfere with presidential power.

Many of the statutes limit firings to cases of “inefficiency, neglect of duty, or malfeasance in office.” The law governing the Fed simply says a member of the Board of Governors can only be removed “for cause,” which is not further defined.

Within days of Cook’s purported firing, she sued, claiming that Trump’s effort to dismiss her violated that law and her constitutional rights by depriving her of a “property interest” in her job without due process.

U.S. District Judge Jia Cobb, a Biden appointee, ruled last month that Cook was entitled to stay in her post because she was fired without being properly informed of the allegations against her and having an opportunity to contest them. Cobb did not rule on whether the allegations against Cook were sufficient to constitute “cause,” whether the facts supported those claims, or whether judges have the power to second-guess Trump’s determination on that score.

The Trump administration appealed. In a 2-1 decision, a D.C. Circuit Court of Appeals panel allowed Cook to remain in her position as the litigation continued. The panel’s majority agreed with Cobb that the summary firing of Cook appeared to have violated her rights.

In recent months, the Supreme Court has permitted Trump to remove Biden appointees — without citing any misconduct — from the panels that oversee a variety of executive branch agencies, including the National Labor Relations Board, the Merit Systems Protection Board, the Consumer Product Safety Commission and the Federal Trade Commission.

However, in a May emergency-docket ruling green-lighting Trump’s firing of two officials from labor-related boards, the justices suggested the Federal Reserve board might be entitled to a greater degree of independence because of its unique history.

“The Federal Reserve is a uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States,” the court’s majority wrote. While declaring that the Fed’s situation was distinguishable from that of the labor-related boards, the court did not take a firm stance on whether the Fed’s members could be shielded from dismissal based solely on political or policy differences.

Still, in a dissent from the May ruling, Justice Elena Kagan jabbed at her conservative colleagues for creating a “bespoke” and “out of the blue” exception for the Fed.

“The Federal Reserve’s independence rests on the same constitutional and analytic foundations as that of the NLRB, MSPB, FTC,” and other agencies, she wrote.

All of the high court’s decisions giving the go-ahead for Trump firings have taken place on its emergency docket. As a result, they are not definitive rulings on the legal issues at stake, but they are effectively wins for Trump because they mean the officials in question will be off the job for months and Trump could try to seat replacements.

The justices have agreed to hear arguments in December on Biden appointee Rebecca Slaughter’s challenge to her dismissal from the FTC. That case has the potential to overturn a 90-year-old Supreme Court precedent, Humphrey’s Executor, that found Congress had the power to restrict the president’s ability to fire FTC members to instances of misconduct or neglect of office.

Cook’s case presents somewhat different legal issues because, perhaps due in part to the Supreme Court’s comments in May about the Fed and because Trump did specify some reasons for dismissing Cook from her post.