The Firewall Held, Barely

No president had ever fired a governor of the Federal Reserve. In the central bank’s 111-year history the power sat unused, a loaded weapon no one picked up, until August 2025. On 20 August that year the director of the Federal Housing Finance Agency, William Pulte, posted a letter accusing Lisa Cook of mortgage fraud: of claiming two homes simultaneously as her principal residence in 2021, before she joined the Board. Within half an hour Donald Trump posted that “Cook must resign, now!!!” On Monday 25 August he purported to fire her for cause, in a letter saying he had “sufficient reason to believe” she “may have made false statements on one or more mortgage agreements.” Cook denied the allegations, sued, and won a preliminary injunction. What followed was the most direct legal test of central bank independence in American history, and on Monday 29 June 2026 the Supreme Court decided it by a single vote.

The 5-4 ruling in Trump v. Cook denied the government’s application to lift the injunction. Chief Justice John Roberts wrote the opinion of the Court, joined by Justices Sotomayor, Kagan, Kavanaugh and Jackson. The Court decided the application on what it called a narrow ground: the Federal Reserve Act, which permits removal of a governor only “for cause,” entitled Cook to notice and some opportunity to respond, and she got neither. “Because Cook did not receive such process, her removal was ‘erroneous and void’ from the start,” Roberts wrote. Along the way the Court rejected the government’s claim that the president’s finding of cause is beyond judicial review, held that the Fed’s place in American history “counsels a substantial threshold for ‘cause,’” and warned that without such limits any alleged misstep could become “a ready pretext” for removal. “Nothing could be more corrosive of the independence that Congress sought to preserve,” the Chief Justice wrote. The Court did not decide whether the mortgage allegations amount to cause, the ABA Banking Journal noted, and it read the injunction as leaving the president free to try again with proper process.

It is worth pausing on the margin. Justice Thomas would have held that the president lawfully removed Cook and that the Act’s for-cause protection is itself unconstitutional. Justice Alito, joined by Justice Gorsuch, and Justice Barrett objected chiefly that the Court had reached too many questions too early, but all three would have granted the stay, which would have let the removal take effect while the litigation ran its course. The same day, in Trump v. Slaughter, the Court accepted the government’s argument that for-cause protections for most independent agencies violate Article II, leaving the Fed as the exception. The firewall held, but the vote tells you how thin the wall has become. Central bank independence in the United States has always rested as much on a norm as on statutory text: presidents do not do this. Norms, once violated, do not restore themselves. They get replaced by litigation, and litigation gets decided by whoever sits on the Court.

The pretext evaporates

The administration’s broader campaign against the Fed suffered a second blow on Wednesday 30 September, when the Fed’s inspector general released its evaluation of the renovation of the Board’s Eccles and 1951 Constitution Avenue buildings. The report documented real failures of project management: the approved budget grew from $1.317 billion in 2020 to $2.381 billion in 2024, and the construction portion more than doubled. But the inspector general wrote that it “did not find reasonable grounds to believe that a violation of federal criminal law had occurred and did not identify violations of Board policy warranting an administrative misconduct finding.” The inspector general began the evaluation in July 2025 at the request of Jerome Powell, who stepped down as chair on 22 May 2026 and remains a governor, with a term that runs to January 2028. Trump responded the same day on Truth Social. “If he doesn’t resign, he should be sued, at the highest level, by the United States Government, for either corruption or incompetence, both of which are completely unacceptable,” he wrote, CNN reported, adding that he had asked Attorney General Todd Blanche to review the report.

Read the sequence carefully. The renovation was the stick used against Powell personally, just as the mortgage documents were used against Cook. With the inspector general finding no criminal violation and no misconduct, a “for cause” case against Powell as a governor would be weaker than the one against Cook that the Court has already stalled. The administration is left demanding a resignation it has no power to compel, which is the sound a norm makes when it collides with a statute.

And yet the fight is not over. In a letter dated Wednesday 5 August, the White House deputy chief of staff, Dan Scavino, told Cook that the president was “considering” removing her and gave her until 26 August to respond, citing the Court’s ruling on notice, SCOTUSblog reported. Her lawyers, Abbe Lowell and Norm Eisen, said the allegations were “as baseless now as they were a year ago” and promised to “challenge this latest pretext.”

What “for cause” can bear

This is where the case gets genuinely difficult, and where both sides’ simplifications fail. The government argued that “cause” sets a very low bar, which would read the protection out of the statute. Cook argued that it sets a very high one; the district court went further and held that conduct before a governor took office cannot be cause at all. The Supreme Court rejected both parties’ positions and declined to define the term, saying only that the answer depends at least in part on the seriousness of the alleged misconduct and its connection to a governor’s duties. The hard question, the one still to be answered, is what weight five-year-old paperwork allegations can carry against a sitting governor, and how much process is enough when the accuser is also the one who decides.

There is a deeper institutional point that the 5-4 vote obscures. When Congress created the Federal Reserve in 1913, it gave governors fixed terms and allowed removal only for cause. The point of that design is to keep monetary policy at a remove from the electoral calendar and from a president who wants lower interest rates and sees the Board as an obstacle. Trump is the first president to try to remove a governor, and the fact that the attempt failed 5-4 rather than 9-0 means the next attempt starts from a different baseline. The question is no longer whether a president would try. It is whether a differently composed Court would agree that the Fed is the exception.

Cook remains on the Board while the dispute continues. Her term runs to January 2038. The firewall held this time, barely, and the inspector general’s report took away the backup pretext. But firewalls that survive by one vote are not restored to their original strength. They are revealed as contingent, which is the most dangerous thing an institution built on credibility can be.

Sources

The history of the attempted removal, the quotations from the president’s posts and letter, the holding and the quotations from the Chief Justice’s opinion, and the positions of the dissenting justices are from the Supreme Court’s opinion in Trump v. Cook, No. 25A312, read on the Court’s website; the lineup is confirmed by the docket, and the ABA Banking Journal’s summary was also read. The description of Trump v. Slaughter is as Justice Kavanaugh’s and Justice Barrett’s opinions in Cook describe it; the Slaughter opinion was not read directly. The renovation figures and the inspector general’s findings are from the inspector general’s report of 29 September, read directly; its release date and the president’s Truth Social post are as CNN reported them, and the post was not seen directly. Powell’s dates as chair and his and Cook’s terms are from their Federal Reserve Board biographies. The Scavino letter and the statement by Cook’s lawyers are as SCOTUSblog reported them; the letter itself and Cook’s response were not read.