Federal Reserve Chair Jerome Powell is set to attend oral arguments at the Supreme Court on Wednesday regarding the case that questions whether former President Donald Trump has the authority to dismiss Federal Reserve governor Lisa Cook. This case has significant implications for the independence of the Federal Reserve, particularly in light of recent political pressures.
The Supreme Court previously ruled in October 2023 to allow Cook to remain in office while preparing to hear arguments. Powell’s presence at the hearing underscores his commitment to maintaining the Fed’s autonomy amid growing scrutiny. Earlier this month, he faced challenges when the Justice Department issued grand jury subpoenas related to a $2.5 billion renovation of Federal Reserve buildings. These subpoenas came in the wake of Trump’s persistent calls for the Fed to reduce interest rates, with the former president openly criticizing Powell as “too late” and “a major loser.”
The Federal Reserve declined to comment on Powell’s attendance at the Supreme Court hearing, which was first reported by The Associated Press. NBC News has reached out to the White House for a statement regarding the ongoing situation.
In a recent statement, Powell asserted that the threatened indictment concerning the renovation project was a “pretext” for political retribution. He emphasized that the Federal Reserve sets interest rates based on public interest rather than presidential preference. In August 2023, Trump attempted to remove Cook from her position, citing allegations of mortgage fraud made by Federal Housing Finance Agency Director William Pulte. However, the Federal Reserve Act restricts the president’s ability to remove governors without evidence of wrongdoing.
Cook has categorically denied the allegations against her, and previous reports indicate that banking documents may contradict the claims made by Trump. Following the president’s attempt to dismiss Cook, her attorney, Abbe Lowell, issued a statement asserting that Trump lacks the authority to remove her. “His attempt to fire her, based solely on a referral letter, lacks any factual or legal basis,” Lowell stated.
Cook’s term as a Federal Reserve governor is scheduled to conclude in January 2038. The outcome of this Supreme Court case could have lasting effects on the operational independence of the Federal Reserve and how it navigates political pressures moving forward.
As the arguments unfold, the financial and political communities will be closely watching the implications for both Cook’s future and the broader authority of the Federal Reserve.