Can Trump fire a Fed governor? The legal battle over Lisa Cook explained

Lisa Cook (Courtesy: Reuters photo)

US President Donald Trump triggered a legal showdown this week by announcing the dismissal of Federal Reserve governor Lisa Cook. In his letter, he accused Cook of mortgage fraud, citing that as “cause” for removal. Cook has denied the allegations and vowed not to resign. No charges have been filed against her, raising questions about whether the president has the authority to fire her without proven misconduct, the New York Times reported.

What the law says about removal

By statute, members of the Federal Reserve Board can only be dismissed “for cause,” a standard typically interpreted as gross misconduct or neglect of duty. Congress deliberately designed this rule to shield the central bank from political interference. Legal experts argue that Trump’s justification does not meet this threshold, and Cook could sue to remain in her post. If she does, a federal judge would determine whether her firing is legally valid, and any ruling could quickly escalate to the Supreme Court.

A precedent dating back to 1935

The question of presidential power over independent agencies rests heavily on a 90-year-old precedent: Humphrey’s Executor v. United States. In that case, the Supreme Court blocked Franklin Roosevelt’s attempt to remove a Federal Trade Commission commissioner for political reasons, affirming that Congress could insulate regulators from presidential control. The ruling has been a cornerstone of the Fed’s independence ever since.

A shifting Supreme Court

More recently, however, the Court has signalled openness to revisiting that precedent. In a 2020 decision involving the Consumer Financial Protection Bureau, Chief Justice John Roberts emphasized the president’s broad removal powers but distinguished between agencies with a single director and multi-member boards like the Fed. Several justices suggested they saw little difference, raising doubts about whether Humphrey’s Executor still holds strong. Since Trump’s return to office, the Court has allowed him to remove officials at agencies such as the National Labor Relations Board and the Consumer Product Safety Commission without cause.

Why the Fed may be different

Despite this trend, the Court has repeatedly hinted that the Fed’s unique role might justify stronger protections. In a ruling earlier this year, justices described the central bank as a “quasi-private entity” in the historical tradition of early U.S. banks. That distinction could mean the Court is reluctant to open the door to direct presidential control over monetary policy, which could unsettle financial markets. But so far, these comments have been offered as dicta—observations rather than binding rulings—leaving the law unresolved.

What happens next

If Cook sues, lower courts will first decide whether her firing meets the “for cause” standard and whether she should be allowed to stay in her position while litigation continues. Trump’s administration would almost certainly appeal any ruling against him, pushing the case quickly to the Supreme Court. For now, experts say the president probably cannot remove a Fed governor without cause, but with the Court reshaping precedent in favour of executive power, the question remains very much alive.