Powell to Watch Justices Weigh Fate of Fed Governor Lisa Cook as Criminal Indictment Looms Over Rate-Setting Independence
Federal Reserve Chair Jerome Powell will sit in the Supreme Court on Wednesday as the justices hear arguments on whether President Donald Trump can fire Fed Governor Lisa Cook, according to a person familiar with Powell’s plans.
At a Glance
- Powell will attend oral arguments over Trump’s attempt to remove Governor Cook
- The Fed has received grand-jury subpoenas tied to a $2.5 billion renovation project
- Trump has publicly attacked Powell for refusing to cut rates further
- Cook’s term runs until January 2038; she denies any wrongdoing
Why it matters: The case tests the Fed’s ability to set interest rates free from political retaliation.
The court allowed Cook to stay in her post in October while it prepares to rule. Powell’s appearance signals the central bank’s determination to shield itself from White House pressure.
Subpoenas Follow Rate Disputes
The Justice Department served the Fed with grand-jury subpoenas earlier this month and warned of a possible criminal indictment, Powell disclosed. The probe centers on the $2.5 billion overhaul of Fed facilities.
The chair linked the threat to his June Senate testimony defending the renovation. He called the potential charges “pretexts” and said they stem from the Fed’s refusal to bend rate policy to Trump’s demands.
“The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President,” Powell said.
Trump’s Public Attacks
Trump has repeatedly urged deeper rate cuts and lashed out at Powell, branding him “too late” and “a major loser.” The president has also targeted Cook, announcing in August that he was removing her after William Pulte, head of the Federal Housing Finance Agency, accused her of mortgage fraud.
The Federal Reserve Act limits removal to cases of proven misconduct. Bank documents reviewed by News Of Los Angeles appear to undercut the fraud claims, and Cook has denied any wrongdoing.
Legal Pushback
Within hours of Trump’s move, Cook’s attorney Abbe Lowell issued a statement declaring the president “has no authority to remove Federal Reserve Governor Lisa Cook.” Lowell added that the attempt, “based solely on a referral letter, lacks any factual or legal basis.”
Cook remains on the job while the litigation proceeds. Her 14-year term is scheduled to end in January 2038.
Fed Independence on the Line
Powell has framed the subpoenas and the Cook dispute as part of a broader campaign to keep monetary policy insulated from political interference. The Supreme Court case will clarify how much protection Fed governors enjoy against dismissal.
The Federal Reserve declined to comment on Powell’s plan to attend the arguments, which were first reported by The Associated Press. News Of Los Angeles has sought comment from the White House.
Key Takeaways
- The justices will decide if a president can fire a Fed governor without cause
- Powell views the subpoenas as retaliation for the Fed’s rate decisions
- The outcome could shape the central bank’s autonomy for decades
Lawrence Hurley contributed.
