U.S. Supreme Court Blocks Removal of Fed Governor Lisa Cook... Expands Dismissal Authority Over Independent Agencies

Fed Board's Political Independence Upheld
Presidential Authority to Remove Independent Agency Heads Recognized
Over 20 Similar Agencies Expected to Be Affected

The U.S. Supreme Court has blocked President Donald Trump's attempt to dismiss Federal Reserve (Fed) Governor Lisa Cook. While the Court ruled that the president can broadly remove the heads of independent regulatory agencies, it made an exception for the central bank, stating that the Fed must be protected from political pressure.

According to The Wall Street Journal (WSJ), Financial Times (FT), and Bloomberg News on June 29 (local time), the Supreme Court rejected the administration's request to allow President Trump to dismiss Governor Cook, with a narrow 5-4 vote. Chief Justice John Roberts, in the majority opinion, stated that Congress had valid reasons to limit the president’s authority to remove Fed governors.

Washington Federal Supreme Court. Photo by Yonhap News Agency

Chief Justice Roberts pointed out that if President Trump’s argument were accepted, the president could remove Fed governors at any time, for any reason, and without prior notice or judicial review. He noted that this would undermine the institutional foundation allowing the Fed to make interest rate decisions free from political interference.

This decision marks the first time the U.S. president has been blocked from removing a Fed governor. President Trump notified Cook of her removal in August last year, citing allegations that she had listed two different homes as her primary residence on mortgage documents. The allegation was raised by Bill Pulte, head of the Federal Housing Finance Agency and a close associate of President Trump. Cook has denied the charges and has not been indicted to date.

The Supreme Court ruled that Cook must be guaranteed a fair opportunity to contest the allegations. Lower courts had previously allowed Cook to remain in her position, and with this Supreme Court decision, she will continue to serve as a Fed governor while the main lawsuit proceeds.

In a statement, Cook said the issue was not about the mortgage documents filed before she became a Fed governor, but rather that attempts to remove her were made because she did not yield to political pressure in her interest rate decisions.

This ruling comes at a time when market concerns about the independence of the Fed under Chairman Kevin Warsh have been growing. Since the start of his second term, President Trump has openly criticized the Fed for not lowering interest rates quickly enough. Investors have expressed concerns that allowing the president to arbitrarily replace Fed board members could undermine the central bank’s commitment to price stability and erode confidence in the U.S. Treasury market.

Authority to Remove Heads of Independent Agencies Other Than the Fed Recognized

U.S. President Donald Trump's Truth Social

However, the Supreme Court did not broadly recognize job security for all independent agency officials. On the same day, in a separate case, the Court upheld President Trump’s removal of Rebecca Slaughter, a Democratic member of the Federal Trade Commission (FTC), in a 6-3 decision. The Court found that legal restrictions preventing the president from dismissing FTC commissioners without cause violate the constitutional principle of separation of powers.

This decision overturns the 1935 Supreme Court precedent known as ‘Humphrey’s Executor,’ which had protected the job security of FTC commissioners. According to Bloomberg, not only the FTC but up to 20 similar independent agencies, including the Securities and Exchange Commission (SEC) and the National Labor Relations Board (NLRB), could be affected by the ruling.

The WSJ noted that agencies such as the National Labor Relations Board, the Consumer Product Safety Commission (CPSC), and the Nuclear Regulatory Commission (NRC) may also now fall under the expanded scope of presidential removal authority.

Chief Justice Roberts stated, “Subordinates who exercise the president’s authority must be removable by the president. Only then are they accountable to the president, who in turn is accountable to the people.” This is widely interpreted as the Supreme Court’s strong endorsement of the conservative legal community’s ‘unitary executive’ theory, which holds that executive power should be concentrated in the president.

President Trump welcomed the decision, calling it a “historic and unprecedented ruling.” He asserted that a 90-year-old precedent had been completely overturned and that presidential powers had been significantly strengthened.

By contrast, the liberal justices strongly dissented. Justice Sonia Sotomayor, in her dissenting opinion, criticized the majority for reshaping the structure of government, warning that dozens of independent commissions now risk effectively becoming purely executive agencies.

This content was produced with the assistance of AI translation services.