Does Donald Trump ‘firing’ Lisa Cook breach Fed independence — and what precedent protects her?

President Donald Trump on Monday announced that he had dismissed Federal Reserve Governor Lisa Cook — a move that has triggered immediate legal and constitutional debate. In a letter posted to his social media platform, Trump claimed he had removed her from office, marking the first time in the Fed’s 111-year history that a president has sought to fire a governor.

Lisa Cook, however, has pushed back. She insists the president lacks the authority to dismiss her and has vowed to continue serving her term.

Who is Lisa Cook? The first Black woman on the Federal Reserve Board

Lisa Cook made history in 2022 when she became the first Black woman appointed to the Federal Reserve Board of Governors. A respected academic and policy expert, her career has spanned roles at the US Treasury, the White House Council of Economic Advisers, and several leading universities.

Her confirmation was fiercely contested — she was approved only after Vice President Kamala Harris broke a 50–50 Senate tie. Cook has often spoken about the barriers women, and particularly Black women, face in economics, describing the field as “especially antagonistic” to their presence.

Can a US president fire a Fed Governor?

Congress designed the Federal Reserve to operate independently from short-term political pressures. Governors serve fixed 14-year terms and, under law, may only be removed “for cause” — generally understood as misconduct, gross neglect, or malfeasance.

The supreme court in a ruling earlier this year suggested that a president can’t fire the chair of the Fed just because he doesn’t like the chair’s policy choices. But he may be able to remove him “for cause”, typically interpreted to mean some kind of wrongdoing or negligence.

This protection exists precisely to prevent presidents from shaping monetary policy to suit electoral needs. Trump’s action therefore raises the question: does political disagreement qualify as sufficient “cause”?

Can Trump fire Cook without cause?

The legal landscape is murky. A 90-year-old Supreme Court precedent has protected independent agencies by limiting the president’s removal powers. Trump argues that such limits are unconstitutional and that the president must retain broad discretion over executive officials.

His administration has already pointed to unproven allegations of mortgage fraud involving Cook, which the Justice Department says it will investigate. Whether those claims meet the legal threshold for removal is uncertain — and will likely be tested in court.

What legal recourse does Lisa Cook have?

Fed Governor Lisa Cook could challenge her dismissal in federal court. A judge would then weigh whether the allegations against her meet the “for cause” standard and decide if she may remain in her role while litigation proceeds.

Should the case advance, it could reach the Supreme Court, setting up a showdown over the constitutional balance between presidential power and the independence of regulators like the Fed.

The 1935 Humphrey’s Executor v. United States case — why it matters today?

The key precedent is Humphrey’s Executor v. United States (1935). In that case, the Supreme Court blocked President Franklin D. Roosevelt’s attempt to sack a Federal Trade Commission official for purely political reasons. The ruling firmly established that leaders of independent agencies cannot be removed at will.

Although a 2020 Supreme Court decision questioned such protections in the case of the Consumer Financial Protection Bureau, Chief Justice John Roberts distinguished between single-director agencies and multi-member boards like the Fed. That distinction could shield Lisa Cook today.

Trump’s fraught history with the Fed

This is not Donald Trump’s first clash with America’s central bank.

From the initial months of his second presidency, Donald Trump has repeatedly berated Fed Chair Jerome Powell for not cutting interest rates aggressively enough. But targeting a sitting governor directly marks a dramatic escalation.

Analysts warn that this step risks undermining market confidence in the Fed’s independence at a time when central banks worldwide are under pressure to balance growth and inflation.

Why firing a Fed chair or governor endangers central bank independence

The importance of an autonomous central bank was underscored in the 1970s, when Fed Chair Arthur Burns was widely criticised for yielding to President Richard Nixon’s pressure to keep rates low ahead of 1972 elections. The result was a surge in inflation that destabilised the US economy for years.

By contrast, Paul Volcker’s willingness in 1979 to raise interest rates to nearly 20% — despite a sharp recession and widespread protests — is celebrated as a turning point that restored price stability. Economists cite Volcker’s example as proof that independence enables central bankers to make tough but necessary decisions.

Why economists prize an independent Fed?

Independent central banks act as a guardrail against political cycles, examined an AP article. By raising or lowering interest rates in line with US economic conditions — rather than political expediency — the American central bank maintains credibility with investors, businesses, and the public.

Stripping that independence, critics warn, could reduce trust in US monetary policy, unsettle financial markets, and raise borrowing costs worldwide.