- Trump’s attempt to fire Fed Governor Lisa Cook has become a major test of the Federal Reserve’s legal independence from the presidency.
- Lower courts have blocked the move, holding that “for cause” removal requires in-office misconduct and basic due process like notice and a chance to respond.
- The Supreme Court has kept Cook in place pending January 2026 arguments, signaling limits on executive control over Fed governance.
- Beyond the lawsuit, the article argues the Fed’s expanding non-monetary powers (payments, regulation, crisis programs) merit reform because they often skew toward big banks over consumers and small businesses.
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The battle over Governor Lisa Cook’s attempted removal is landmark: it tests the legal boundaries of presidential power over independent agencies and could reshape the balance of monetary policymaking versus political control. Courts have so far sided with preserving Fed independence, emphasizing that removal “for cause” encompasses only misconduct while in office, and that governors have constitutional due process rights. [System jurisprudence dates back to the Fed Act of 1913 and long-standing practice.],,
Despite Trump’s criticisms of Fed Chair Jerome Powell—over slow interest rate cuts and other policy decisions—actual firings of governors are rare and constrained. In May 2025, the Supreme Court suggested Fed board members enjoy broader protections than other agency officials., Moreover, potential removal now faces not just legal barriers but broad bipartisan resistance from former Fed chairs, Treasury secretaries, and economists.,
Yet, the criticism that animates the original Atlantic article—that the Fed has grown too powerful and unaccountable—is gaining traction. Evidence in recent years of overdraft fee revenues, delayed payments systém implementation, and bailout preferences during crises support arguments that the Fed’s non-monetary powers disproportionately serve large banks over average consumers and small businesses. [Main Article, related data points below.] Such critiques suggest a broader reform agenda: stripping the Fed of roles beyond setting interest rates, moving regulatory or payment oversight to bodies more directly accountable to Congress or the public. [Main Article]
Strategically, the Cook case presents multiple possible flashpoints: if the Supreme Court rules in favor of Trump, this could open the door to politically driven use of Fed power, eroding inflation management credibility and spooking markets. If the courts affirm the status quo, efforts for structural reform may gain traction but face political obstacles. Lots remains uncertain—including definitions of “cause,” the future of Fed powers outside rate setting, and the timeline of potential changes to Fed governance.
Supporting Notes
- On September 9, 2025, U.S. District Judge Jia Cobb issued a preliminary injunction blocking President Trump from removing Governor Lisa Cook, ruling that her removal likely violated the “for cause” provision of the Federal Reserve Act.,
- Courts consistently concluded that the alleged misconduct cited by Trump occurred before Cook was appointed (in 2022), meaning it does not meet the legal standard required for removal under “for cause,” which refers to conduct while in office.,
- Cook’s due process rights were judged likely violated, since she had not been given notice or chance to respond before being removed.,
- The Supreme Court allowed Cook to remain in her role pending oral arguments set for January 2026, deferring Trump’s request to lift lower court blocks on her firing.
- Former Fed chairs (Yellen, Bernanke, Greenspan) and Treasury Secretaries from both parties joined a brief urging the Supreme Court to reject Trump’s move, arguing that removing governors for policy disagreements undermines Fed independence.
- In May 2025, the Supreme Court signaled that the Fed’s structure might make its governors more protected from presidential removal than officials of many other independent agencies.
- Overdraft and non-sufficient funds (NSF) fee revenues have declined sharply: in 2023 they totaled $5.83 billion—down over 50% from 2019’s $11.96 billion—saving households who overdraft an average of $185 annually. [Related metrics partially from main article vs CFPB data]
- During the pandemic, the Fed’s Main Street Lending Program distributed less than 3% of its allocated $600 billion to small and medium businesses, while over $100 billion flowed toward financial institutions and investor-support mechanisms. [Main Article]