Supreme Court faces historic challenge as economists defend Fed governor's independence

In September 2025, a significant legal and political battle unfolded in the United States concerning the potential removal of Lisa Cook, a Federal Reserve governor. President Donald Trump sought to dismiss Cook, accusing her of mortgage fraud for allegedly claiming two residences as primary homes, a move that had never been attempted by any president in the Federal Reserve's 112-year history. Cook denied the allegations and was not charged with any crime. Following Trump's action, two federal courts ruled in her favor, allowing her to remain in her position while her lawsuit concerning the dismissal progressed through the judiciary system. On September 26, 2025, a coalition of 18 distinguished former Federal Reserve chairs, Treasury secretaries, and top economic advisors, representing both political parties, submitted a brief to the Supreme Court urging against Cook's removal. This group emphasized the importance of maintaining the Fed's political independence, arguing that an independent central bank is essential for achieving stable inflation rates without negatively impacting employment. They warned that succumbing to political pressure would undermine the public's trust in the Fed and could lead to adverse economic consequences. The legal fight surrounding Cook's position is poised to impact perceptions of the Federal Reserve's credibility and efficacy in executing monetary policy. The engagement of such a notable bipartisan group underscores the historic nature of Trump's bid to reshape the Fed's leadership and the potential economic ramifications involved. Furthermore, former officials highlighted the critical relationship between the Fed's independence and its ability to control inflation effectively. As the Supreme Court considers Trump's appeal against lower court rulings that favored Cook, the decision may set a precedent for future interactions between the presidency and independent federal agencies. Never before has a president attempted to remove a sitting Federal Reserve governor, making this situation unprecedented and pressing in the context of U.S. governance and economic stability.