US Supreme Court expands presidential firing power but lets Fed's Lisa Cook stay for now

The US Supreme Court has broadened presidential power to remove the heads of independent federal agencies, while making a specific exception for the Federal Reserve. In the latest ruling, the justices allowed Federal Reserve Governor Lisa Cook to remain in her post as she fights President Donald Trump's effort to dismiss her over allegations of mortgage fraud, which she denies. The decision marks a major shift in the balance between the White House and agencies that were designed to operate with a degree of independence.

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The court's majority said protections from removal are inconsistent with the Constitution's separation of powers, effectively weakening a 91-year-old precedent that had limited when presidents could fire agency leaders. Chief Justice John Roberts wrote for the court that such protection from removal is contrary to the constitutional structure. The ruling arose from the case of former Federal Trade Commission member Rebecca Slaughter, whom Trump fired without cause despite a federal law requiring a reason.

The practical effect reaches well beyond the FTC. The court's reasoning extends to agencies including the National Labor Relations Board, the Merit Systems Protection Board and the Consumer Product Safety Commission, where Trump has also removed board members. The justices had already signalled support for the administration's position by allowing those removals to take effect while legal challenges continued.

Cook's position was treated differently because of the Federal Reserve's role in setting interest rates and its long-standing insulation from direct political control. The ruling matters because it changes the legal landscape for a wide range of regulators that oversee labour relations, product safety, nuclear energy and other parts of American life. It also raises fresh questions about how far a president can go in reshaping the federal bureaucracy through dismissals.

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For markets, the carve-out for the central bank is especially significant because the Federal Reserve's independence is widely seen as central to confidence in US monetary policy. The case also reflects a broader legal and political struggle over the scope of executive authority. No president before Trump had sought to assert such direct control over agencies that were created to operate at arm's length from the White House.

The court's decision overturns the logic of Humphrey's Executor, the 1935 ruling that had long been used to justify limits on presidential removal power for independent agency officials. Trump welcomed the ruling in a social media post, calling it one of the most important decisions ever issued on presidential powers. The court's six conservative justices formed the majority, while the three liberal justices dissented.

The outcome leaves the administration with greater leverage over independent agencies, even as the Federal Reserve remains partially shielded in this specific dispute. What remains unresolved is the underlying case against Cook and whether the administration can ultimately meet the legal threshold to remove her. The lower courts will still have to examine the allegations and the process used to try to dismiss her.

The broader constitutional fight over independent agencies is also likely to continue, given the ruling's implications for regulators across the federal government.

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The US Supreme Court has blocked President Donald Trump's attempt to remove Federal Reserve Governor Lisa Cook, in a ruling that preserves her position for now. The 5-4 decision sends the dispute back to lower courts and keeps the case focused on whether the administration followed the legal process required to remove a central bank governor. The ruling is being seen as an important test of the Federal Reserve's independence from political pressure.

The justices said Cook had not been given sufficient due process to contest her removal. Under the law, a president may only remove a Federal Reserve governor "for cause", a safeguard designed to protect the central bank from short-term political influence. The administration had argued that Cook should be removed over allegations of mortgage fraud, which she has denied.

The court did not settle the underlying allegations, instead leaving the administration to prove its case in lower courts if it wants to continue with the firing attempt. The dispute began after Trump announced in August that he intended to remove Cook, citing claims that she had filed mortgage forms saying two different properties were her principal residence at the same time. The administration has argued that even if the conduct was inadvertent, it could amount to negligence and damage confidence in the central bank.

Cook's lawyer told the court that the handling of the case would make Congress's protection for the Federal Reserve "kind of a joke". The White House solicitor general said the social media announcement gave Cook enough notice and opportunity to respond. The case matters because the Federal Reserve plays a central role in setting US monetary policy, and its independence is widely viewed as important for long-term economic stability.

Any move by a president to remove a governor raises questions about how far the executive branch can go in shaping interest-rate policy and broader financial oversight. The ruling also comes at a time when the central bank remains under close political scrutiny, making the outcome significant for markets as well as for constitutional law. The legal fight has also highlighted the narrow standard for removing Federal Reserve governors, which was intended to shield the institution from political interference.

That protection has long been part of the framework around the central bank, reflecting concern that policy decisions should not be driven by immediate political needs. In this case, the court's decision suggests that process will remain central to any attempt to remove a governor, even when the White House says it has cause. What happens next will depend on the lower courts, where the administration must substantiate its allegations if it wants to proceed.

Cook will also have the chance to challenge the claims against her, keeping the dispute alive for now. The key questions are whether the administration can meet the legal threshold for removal and how quickly the courts will move to resolve the case.

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