Supreme Court showdown on federal reserve governance as Powell backs Lisa Cook

In a rare move, Jerome Powell is set to attend a Supreme Court hearing on the federal reserve that could reshape the central bank’s governance and independence.

Powell’s unusual show of support for Lisa Cook

Federal Reserve Chair Jerome Powell will be present at the Supreme Court’s oral arguments on Wednesday in a case involving the attempted firing of Fed governor Lisa Cook. The hearing centers on an effort to remove one of the seven members of the central bank’s powerful Board of Governors.

The case asks whether President Donald Trump can dismiss Cook, as he said he would in late August, in what would be an unprecedented removal of a sitting Fed governor. Powell plans to attend Wednesday’s session, according to a person familiar with the matter who requested anonymity, underscoring the stakes for central bank independence.

This is a far more public show of support for Cook than Powell has offered previously. However, it comes after his announcement last week that the Trump administration has issued subpoenas to the Fed, threatening an unprecedented criminal indictment of the Fed chair himself.

Escalating conflict between Trump and the central bank

Powell, who was appointed to the top job by Trump in 2018, now appears to be moving away from last year’s more subdued response to the president’s repeated attacks on the central bank. Instead, he is signaling a willingness to confront the White House more openly over the Fed’s independence and its rate-setting decisions.

On Jan. 11, Powell released a video statement condemning the subpoenas as “pretexts” for Trump’s efforts to force him to deliver a sharp cut in the Fed’s key interest rate. Moreover, he framed the legal pressure as part of a broader attempt to influence monetary policy through intimidation rather than economic argument.

Powell oversaw three rate cuts late last year, bringing the benchmark policy rate down to about 3.6%. However, Trump has argued that the rate should be closer to 1%, a stance that few mainstream economists support and that many see as risking asset bubbles or financial instability.

Allegations against Lisa Cook and Supreme Court intervention

The Trump administration has accused Cook of mortgage fraud, an allegation she has denied. No criminal charges have been filed against her, which has fueled debate over whether the dispute is more about policy and politics than alleged misconduct.

Cook responded by suing to keep her position on the Fed’s board, arguing that her removal would violate statutory protections designed to shield governors from political interference. On Oct. 1, the Supreme Court issued a brief order allowing her to remain in office while the justices consider her case.

That interim ruling preserved the status quo at the central bank during a period of rising political pressure. It also ensured that the outcome of this high-stakes dispute will be shaped directly by the nation’s highest court rather than by unilateral executive action.

Implications for federal reserve control and interest-rate policy

If Trump ultimately succeeds in removing Cook, he would gain the power to appoint another person to fill her seat. Moreover, that change could give his appointees a majority on the Fed’s seven-member board at a critical moment for interest-rate policy and financial regulation.

Such a shift would significantly increase White House influence over decisions on bank oversight and the setting of the key policy rate that guides borrowing costs across the U.S. economy. That said, it would also raise fresh concerns about political pressure on a central bank traditionally regarded as independent.

Powell’s decision to attend the Supreme Court hearing on this supreme court fed case underscores how central the dispute has become to the future of U.S. monetary policy. It highlights the collision between presidential demands for lower rates and the institutional safeguards meant to protect technocratic decision-making.

In sum, the outcome of the Cook case, combined with the ongoing clash over subpoenas and rate policy, will shape the balance of power between the White House and the Fed for years to come. The court’s ruling will signal how far presidents can go in reshaping the central bank’s leadership and direction.