The Supreme Court is likely to hand Trump a rare loss on the Federal Reserve

The Supreme Court’s Republican majority ordinarily believe that President Donald Trump is allowed to fire virtually anyone who works for a federal agency. Last July, for example, they permitted the Trump administration to fire nearly half of the Department of Education’s employees.

In May, however, the Court also signaled that the Federal Reserve is special. In Trump v. Wilcox (2025), the Court indicated that Trump may not fire the Fed’s leaders because that agency is a “uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States.”

It is not at all clear what this cryptic sentence means, but at Wednesday morning’s oral argument in Trump v. Cook, most of the justices signaled that they will adhere to the view that they laid out in Wilcox. Six justices — the three Democrats plus Chief Justice Roberts, Justice Brett Kavanaugh, and Justice Amy Coney Barrett — appeared very likely to reject Trump’s attempt to seize control of the Federal Reserve. Meanwhile, even Justice Samuel Alito, who is ordinarily a kneejerk Republican partisan, asked some skeptical questions of Trump’s lawyer.

The Federal Reserve is supposed to make technocratic decisions about where to set interest rates. If they set those rates too high, it will be too expensive for businesses to borrow money and investment and hiring will stagnate. At the same time, if they set rates too low, the economy will take off in the short term, but will experience much more damaging inflation in the long term.

The Fed, in other words, has the power to inject cocaine into the economy — giving it a temporary high at the price of much greater economic pain down the road.

For this reason, Congress shields the Fed’s governors from presidential control, only permitting the president to fire them “for cause.” This is to prevent the president from pressuring them to lower interest rates in an election year, when the president’s party would benefit from a temporary economic high.

The Cook case, meanwhile, appears to involve Trump’s attempt to bypass this law by making up a fake reason to fire a Fed governor. And, if Trump prevails in Cook, his administration has already signaled that it will bring similarly dubious allegations against Fed chair Jerome Powell.

Trump’s attempt to neutralize the Fed’s independence, explained

Last August, Trump attempted to fire Lisa Cook, a Biden appointee to the Fed’s Board of Governors, claiming that she falsely claimed on a mortgage application that “both a property in Michigan and a property in Georgia would simultaneously serve as her principal residence.” But Trump has yet to provide any meaningful evidence that supports this allegation, and he never gave Cook a hearing where she could explain this alleged falsehood.

According to a Reuters report from last September, moreover, these allegations appear to be fabricated. While Cook does appear to have signed a document indicating that she would use the Atlanta property as a primary residence, that document states that the bank may agree in writing that the property may be used for something else. And, in a separate document, Cook told the lender that the property would be used as a “vacation home.”

Cook’s lawyer, Paul Clement, told the justices on Wednesday that, “at most,” any discrepancies in Cook’s mortgage documents are inadvertent.

Right out of the gate, several key justices appeared skeptical that a minor discrepancy on mortgage documents could justify Trump’s decision to fire Cook. As anyone who has ever obtained a mortgage can testify, the process requires the borrower to sign a huge pile of documents, many of which are drafted by the government, with little time to review them or to ask for them to be changed — even if such a change can be made. 

Thus Chief Justice John Roberts told solicitor general John Sauer early in the argument that “we can debate…how significant it is that, in a stack of papers you have to fill out when you’re buying real estate,” one of those papers contains an inaccurate representation. Roberts also expressed skepticism of Sauer’s claim that Cook engaged in “deceit,” asking whether it is really fair to apply this word to “an inadvertent mistake contradicted by other documents in the record.”

Justice Brett Kavanaugh, meanwhile, warned Sauer that, if the president can fire a Fed governor because they discover what is at most a minor paperwork error, then that will destroy the Federal Reserve’s independence. In such a world, presidents will engage in a “search and destroy” operation, combing through the records of every Fed governor they disagree with in order to find a pretext to justify firing them.

Meanwhile, Justice Amy Coney Barrett asked an even more basic question: “Why are you afraid of a hearing?” If Trump is so confident that Cook actually did something wrong, why wouldn’t he give her notice of the allegations against her and an opportunity to defend herself before he tries to fire her? 

Of all the justices, only Gorsuch seemed to offer a coherent reason to rule in favor of Trump — Gorsuch suggested that Cook may only challenge Trump’s decision to fire her by seeking a rarely used court order known as a “writ of mandamus.” It is nearly impossible to win a mandamus case, and Sauer argued that mandamus may never be used against the president. So Gorsuch’s approach would likely amount to a total victory for Trump.

The justices did appear uncertain about how to resolve several tough issues lingering in this case

Though most of the justices appeared skeptical of Trump’s arguments in Cook, many of them also were frustrated by several difficult issues lurking within this case. If Cook is entitled to a hearing, what should that hearing look like? What exactly does it mean to fire someone “for cause?” And should courts look to other federal statutes, to legislative history, to the English common law, or to some combination of the three to find the answers to these questions?

Indeed, these questions are so vexing that some of the justices, including Barrett and Justice Ketanji Brown Jackson, suggested that the Court might avoid deciding them until the lower courts have more time to consider this case.

Although the Court decided to hold an oral argument in Cook, the case technically arose on the Court’s “shadow docket,” a mix of emergency motions and other matters that the justices typically decide without oral argument or even without explaining their decision. After a lower court ruled that Trump may not fire Cook, Trump asked the Supreme Court to issue a temporary emergency order removing her from office.

But when a party seeks such an order, the Supreme Court said in Nken v. Holder (2009), they must do more than show that they are likely to prevail in the case. Among other things, they must also show that they will be “irreparably injured” if the Supreme Court does not intervene right away. They also must show that an immediate order would not harm the “public interest.”

Although the Court’s Republicans appear to have exempted Trump from having to comply with Nken in the past, Barrett, a Republican appointed by Trump, asked Sauer about an amicus brief filed by economists who argued that allowing Trump to fire Cook would trigger a recession. A recession, as Barrett suggested, would not be in the public interest. She also asked Clement to provide his best argument that Trump will not experience irreparable harm if Cook gets to remain on the Fed’s board while this case is fully litigated in lower courts.

Barrett, in other words, appeared to be looking for a way to reject Trump’s emergency request without having to decide any of the harder questions this case presents.

Not all of the justices, however, appeared to believe that such a narrow decision would be desirable. Roberts, in particular, expressed doubt that there would be any point to giving Cook an additional hearing, because there aren’t really many factual disagreements to be explored here. Cook will simply claim in such a hearing that she, at most, made an inadvertent mistake.

So Roberts seemed to believe that the Court should just decide, as a legal matter, whether such a mistake is sufficient grounds to fire her.

Other justices appeared exasperated that they were being asked to decide this case so quickly and with so little evidence in the record. Alito, for example, complained that this case came up to the Supreme Court in such a “hurried manner” that Cook’s mortgage applications aren’t even part of the official record before his Court.

All of which is a long way of saying that it is far from clear what the Cook opinion will say, or even if it will say anything more than “we’ll decide this case at some point in the future.”

But even such a narrow order would be good news for Cook in the short term, because a lower court order keeping her in office remains in effect. A Supreme Court ruling against Trump might also dissuade Trump from continuing to target Powell. And it does appear that, whenever they get around to deciding Cook, most of the justices do not think that Trump should be able to order Fed governors to lower interest rates or else they will be fired.