Supreme Court Allows Fed Governor Lisa Cook to Remain Pending Lawsuit

The Supreme Court on Monday issued a 5-4 decision that permits Federal Reserve Governor Lisa Cook to continue serving while her lawsuit contesting the Trump administration’s effort to fire her proceeds. The ruling, written by Chief Justice John Roberts, held that removing a Fed governor without cause would undermine constitutional separation of powers and effectively turn for-cause protection into at-will employment.

Cook, a Biden-nominated member of the central bank’s Board of Governors, has denied the mortgage-fraud allegations that the administration cites as grounds for dismissal. Lower courts had already allowed her to remain in office, and the high court’s order sustains that status pending further litigation.

The decision follows a broader Supreme Court ruling that affirmed the president’s authority to fire heads of independent agencies, except for the Federal Reserve. The court previously upheld the administration’s removal of a Federal Trade Commission member, extending the principle to other agencies such as the National Labor Relations Board and the Consumer Product Safety Commission.

Legal analysts note that the case is being closely watched by investors because a successful removal could enable the president to reshape the Fed’s board and influence monetary policy. The administration has also faced other confrontations with the central bank, including a criminal investigation of former Fed Chair Jerome Powell that was later closed.

The Solicitor General’s office argued that Cook’s mortgage applications, which listed two properties as primary residences before she joined the Fed, constituted at most “gross negligence.” Cook has not been charged with any crime.