Supreme Court rules Fed governors can only be removed 'for cause', upholding independence

Overview

As a technical legal matter, the Supreme Court's decision in Trump v. Cook was a narrow one. As a practical matter, it has far-reaching, mostly favorable implications for the independence of the Federal Reserve.

Most importantly, on the same day the Court mandated that the President can remove members of traditionally independent agencies such as the Federal Trade Commission, it made clear that the Board of Governors of the Federal Reserve is an exception to that new rule. During their fourteen-year statutory terms, Members of the Board may not be removed for policy disagreements or at the whim of the President. They may be removed only, as the Federal Reserve Act says, "for cause."

The immediate consequence of the decision is that the President's effort to remove Governor Lisa Cook from the Board has been halted. Although the Court did not preclude the President from trying again if he provides her with some explanation of the evidence for her removal and an opportunity to respond, the Court's interpretation of the "for cause" requirement in the Federal Reserve Act makes the case against her a difficult one to win unless important new facts emerge.

The remainder of this post provides background on the case, explains the Court's ruling, and identifies significant questions that remain:

• The nature of the process that must be followed before a Governor can be removed
• The extent to which the exception for the Fed applies to its functions other than monetary policy
• The durability of the critical ruling that for-cause protection for Fed Governors is constitutional

Background

On August 20, 2025, President Trump posted a brief message on social media: "Cook must resign, now!!!" Next to the message was a link to a Bloomberg news story that the Director of the Federal Housing Finance Agency had sent a letter to the Justice Department calling for an investigation of Governor Cook for possible criminal fraud in connection with her applications for mortgages on residential properties. His letter stated that in the course of two weeks she had signed mortgage documents on homes in both Ann Arbor and Atlanta that each declared the property in question would be her principal residence for at least a year. Mortgages on primary residences are often lower than mortgages on vacation or other secondary homes.

On August 25, the President posted on social media a letter to Governor Cook saying that he was removing her for cause, as authorized by the Federal Reserve Act. The cause was "sufficient reason to believe you may have made false statements on one or more mortgage agreements."

Three days later, Governor Cook filed suit in Federal District Court in Washington, D.C., contesting the President's action and seeking a temporary restraining order to keep her in place during the pendency of the litigation. The District Court granted a preliminary injunction to that effect. A divided U.S. Court of Appeals in Washington upheld the injunction. After a request for a stay of the injunction by the Government, the Supreme Court set the matter for oral argument.

Although neither the Government, Governor Cook, nor the courts have made any formal submissions or findings of the facts underlying the allegations of mortgage fraud, the investigative reporting of various media outlets uncovered facts quite favorable to Cook. Most significantly, Reuters reported that other documents executed by Governor Cook in connection with her Atlanta property mortgage described it as a vacation home, not as a primary residence.

The Decision

On June 29, the Court, by a vote of 5-4, sided with Cook, thereby allowing her to stay at the Fed while the litigation continues. Chief Justice Roberts wrote the majority opinion, joined by Justice Kavanaugh and the three non-conservative Justices (Sotomayor, Kagan, and Jackson).

There were three dissenting opinions:

• Justice Thomas took issue with virtually everything in the majority opinion, including that for-cause removal protection for Fed governors is constitutional.
• Justices Alito and Barrett — the former joined by Justice Gorsuch — filed dissents on the relatively narrow ground that the Court should have ruled only on whether to stay the lower court's injunction, not on the constitutionality of the Federal Reserve Act and the meaning of the "for cause" provision.

The breadth of the majority opinion and the discrete basis on which three of the Justices dissented may partly account for the fact that the vote was closer than many observers had expected.

The technical question before the Court — whether the District Court's injunction should be allowed to stand — was answered by the majority's interpretation that the Federal Reserve Act requires some kind of procedure before a President may remove a Fed governor. Since there had been no such procedure, the injunction was upheld.