{"id":18785,"date":"2026-06-29T21:01:50","date_gmt":"2026-06-29T21:01:50","guid":{"rendered":"https:\/\/siliconvalleymovingpost.com\/?p=18785"},"modified":"2026-06-29T21:01:50","modified_gmt":"2026-06-29T21:01:50","slug":"what-the-supreme-courts-ruling-in-the-cook-case-means-for-federal-reserve-independence","status":"publish","type":"post","link":"https:\/\/siliconvalleymovingpost.com\/?p=18785","title":{"rendered":"What the Supreme Court\u2019s ruling in the Cook case means for Federal Reserve independence"},"content":{"rendered":"
\n

By CHRISTOPHER RUGABER<\/strong><\/p>\n

WASHINGTON (AP) \u2014 The Supreme Court on Monday said the Federal Reserve, unlike any other agency in Washington, has a measure of independence from the presidency and day-to-day politics. But the court didn\u2019t define to what extent.<\/p>\n

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The case is the latest round in an unprecedented fight between the Fed and President Donald Trump. More political interference at the Fed could upend financial markets around the world, which closely follow its interest rate moves.<\/p>\n

Trump has repeatedly demanded that the central bank cut its key interest rate to lower borrowing costs for homeowners, businesses, and even the government itself. Trump sought to fire a Fed governor, Lisa Cook, last August after accusing her of mortgage fraud \u2014 a charge she denies. Cook was appointed by former President Joe Biden and removing her would give Trump the opportunity to name a more amenable official in her place.<\/p>\n

In a 5-4 decision, the court ruled that the president cannot fire the seven members of the Fed\u2019s board of governors without a clear cause. The decision endorses the Fed\u2019s independent structure even as the court eliminated such protections for leaders of other agencies, including the Federal Trade Commission, whom the president can fire at-will.<\/p>\n

\u201cThat\u2019s a big deal,\u201d said Scott Alvarez, the central bank\u2019s former top lawyer. \u201cThat\u2019s one of the things that makes the Fed independent.\u201d<\/p>\n

While the decision is a boost for the Fed, it does leave Cook vulnerable to further attempts by the Trump administration to fire her. Trump said on his social media site, Truth Social, that \u201cwe will take appropriate action immediately\u201d to remove Cook. But for now, she will keep her job while the case is fought in lower courts.<\/p>\n

Here is what the court decided, and why the Fed\u2019s independence matters.<\/p>\n

\n<\/div>\n

The court said the Fed\u2019s independent structure is constitutional<\/h4>\n

In a separate case Monday, the justices ruled 6-3 that the Constitution allows the president to fire the heads of federal agencies that had previously been considered independent. But in the Cook case, the court carved out a clear exemption for the Fed.<\/p>\n

The Fed has a \u201cunique historical status and role,\u201d Chief Justice John Roberts , similar to the First and Second Banks of the United States that existed in the early 1800s and that operated \u201cat a deliberate remove from the ordinary political process.\u201d<\/p>\n

If the president could fire a Fed governor for any reason, it would undermine that official\u2019s ability to make decisions independently, Roberts wrote.<\/p>\n

\u201cNothing could be more corrosive of the independence that Congress sought to preserve,\u201d the chief justice\u2019s opinion said.<\/p>\n

\n<\/div>\n

Still, Kathryn Judge, a law professor at Columbia University, said the justices\u2019 decision to strike down the independence of other agencies erodes the Fed\u2019s standing by leaving it as the only remaining such body in Washington. The principle of independent, non-political judgment has been undercut, she added.<\/p>\n

\u201cFed independence lives on for another day, but is not as robust as it was prior to these decisions,\u201d she said.<\/p>\n

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Cook and other governors are still vulnerable<\/h4>\n

And the court did not fully close the door on Trump\u2019s efforts to fire Cook. Trump\u2019s lawyers accepted that Trump could only fire her \u201cfor cause,\u201d but they argued that the White House could define the cause and it couldn\u2019t be second-guessed by courts.<\/p>\n

The Supreme Court instead said that \u201cfor cause\u201d likely involved serious misconduct that wasn\u2019t related to their professional duties, but didn\u2019t provide much detail. More importantly, they also threw out the higher standard that Cook\u2019s lawyers had pushed, which would have allowed governors to only be fired for inefficiency, neglect of duty, or malfeasance on the job. Since the alleged mortgage fraud occurred before she joined the Fed, such a standard would have likely shut down the case.<\/p>\n

The court also said that Cook had to be given formal notice of her firing \u2014 the president only announced it last August on Truth Social \u2014 and an opportunity to formally respond, though the court did not specify what the process should look like. Indeed, Roberts included a footnote in his opinion noting that nothing forbids Trump from \u201ctrying again\u201d to fire her, provided she is given proper notice and a chance to contest it.<\/p>\n

Trump could seek to provide a bare-bones procedure while firing Cook again to bolster his case in the lower courts, legal experts said.<\/p>\n

\u201cThat\u2019s an area of vulnerability still for the Federal Reserve and for Lisa Cook,\u201d Alvarez said.<\/p>\n

Why the Fed\u2019s independence matters<\/h4>\n

The court battle will likely further define the boundaries of Fed independence.<\/p>\n

The Fed wields extensive power over the U.S. economy. By cutting the short-term interest rate it controls \u2014 which it typically does when the economy falters \u2014 the Fed can make borrowing cheaper and encourage more spending, accelerating growth and hiring. When it raises the rate \u2014 which it does to cool the economy and combat inflation \u2014 it can weaken the economy and cause job losses.<\/p>\n

Economists have long preferred independent central banks because they can more easily take unpopular steps to fight inflation, such as raise interest rates, which makes borrowing to buy a home, car, or appliances more expensive.<\/p>\n

The importance of an independent Fed was cemented for most economists after the extended inflation spike of the 1970s and early 1980s. Former Fed Chair Arthur Burns has been widely blamed for allowing the painful inflation of that era to accelerate by succumbing to pressure from President Richard Nixon to keep rates low heading into the 1972 election. Nixon feared higher rates would cost him the election, which he won in a landslide.<\/p>\n

Paul Volcker was eventually appointed chair of the Fed in 1979 by President Jimmy Carter, and he pushed the Fed\u2019s short-term rate to the stunningly high level of nearly 20%. (It is currently 3.6%.) The eye-popping rates triggered a sharp recession, pushed unemployment to nearly 11%, and spurred widespread protests.<\/p>\n

Yet Volcker didn\u2019t flinch. By the mid-1980s, inflation had fallen back into the low single digits. Volcker\u2019s willingness to inflict pain on the economy to throttle inflation is seen by most economists as a key example of the value of an independent Fed.<\/p>\n

Most investors prefer an independent Fed, partly because it typically manages inflation better without being influenced by politics, but also because its decisions are more predictable. A Fed swayed by politics would be harder to anticipate, and investors could demand higher yields on Treasurys before buying them. That would raise borrowing costs throughout the economy.<\/p>\n

Read more ICE releases a Texas nun intercepted walking to church dressed in her habit<\/a><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

The Supreme Court ruled the president cannot fire Fed governors without clear cause, preserving independence while leaving some uncertainty.<\/p>\n","protected":false},"author":1,"featured_media":18784,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[43,2],"tags":[],"class_list":["post-18785","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-based-on-facts-either-observed-and-verified-directly-by-the-reporter-or-reported-and-verified-from-knowledgeable-sources","category-news"],"yoast_head":"\nWhat the Supreme Court\u2019s ruling in the Cook case means for Federal Reserve independence - Silicon Valley Moving Post<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/siliconvalleymovingpost.com\/?p=18785\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What the Supreme Court\u2019s ruling in the Cook case means for Federal Reserve independence - 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