The first-ever "for cause removal" controversy in history heats up as Trump dismisses Fed official Cook- lawsuit filed to Supreme Court.

On Thursday, President Trump escalated his legal battle to fire Federal Reserve Director Cook to the Supreme Court, seeking to overturn a lower court's ruling that blocked his dismissal decision. Cook strongly opposed this move, warning that if she were immediately fired, it would disrupt the financial markets and impact the independence of the Federal Reserve. The Trump administration requested an emergency injunction from the Supreme Court in their appeal, allowing the President to dismiss Cook immediately before a final decision is made in the case. Deputy Chief of the Justice Department D. John Sauer stated in the filing that the court should not interfere with the President's power to remove based on "for cause" grounds, and that the President's determination of the reason for dismissal was not subject to judicial review. Trump's action came a day after the Federal Reserve announced a 25 basis point interest rate cut at the September policy meeting. Cook had voted in favor of the rate cut at the meeting and continued to fulfill her duties as a director. Her legal team pointed out that Trump only sought emergency relief from the Supreme Court after the Fed's meeting to avoid causing chaos in the financial markets. Cook's lawyers wrote in the filing, "Granting the President's emergency request would upend the status quo, undermine the independence the Fed has long maintained, and disrupt the U.S. economy. Director Cook has been performing her duties normally, including participating in this week's Federal Open Market Committee (FOMC) meeting." This case marks the first time in the Federal Reserve's 111-year history that a director has faced dismissal for cause. On August 25, 2025, Trump cited allegations of mortgage fraud as the reason for Cook's dismissal, claiming that she made false statements in her 2021 mortgage documents to obtain more favorable loan terms. Cook filed a lawsuit on August 28, arguing that the President's decision was illegal and seeking a court order to block her dismissal. On September 9, a federal district court ruled in favor of Cook, temporarily reinstating her position so she could participate in this week's Fed meeting. On September 16, the federal appeals court upheld the district court's decision with a 2-1 ruling, allowing Cook to continue in her position during the trial and stating that immediately removing her from office would "upend rather than maintain the status quo." If Trump succeeds in dismissing Cook and appointing a successor, he would control four out of the seven seats on the Federal Reserve Board, giving him a majority and significant influence over monetary policy. The Trump administration believes that Cook's alleged mortgage fraud and false statements are not in line with the requirements of holding a position of "public financial trust." The President, after finding "cause" for dismissal, has the authority to remove a Federal Reserve director that is not subject to judicial review. Immediately removing Cook from her position could help restore the White House's control over the Fed and prevent the widening of policy disagreements. Cook's legal team argues that Trump has failed to provide sufficient evidence to support his reasons for dismissal and suggests that his actions are politically motivated to undermine the independence of the Federal Reserve. Cook has continued to fulfill her duties during this litigation, and immediate dismissal would disrupt the financial markets and create policy uncertainty. Trump's decision to seek emergency relief after the FOMC meeting demonstrates that his dismissal is strategic rather than urgent. Analysts point out that this case has become a landmark event testing the independence of the Federal Reserve and the boundaries of the President's executive powers. If Trump prevails, he would have decisive power over monetary policy decisions, potentially pushing for more aggressive rate cuts or other policies. If Cook wins, it would strengthen the Fed's position as an independent institution and limit the President's ability to intervene in economic policy. Additionally, the market is closely monitoring the Supreme Court's actions. If Cook is suddenly fired, it could lead to increased market volatility and uncertainty for the US dollar, bonds, and stock market in the short term. Cook was first appointed to the Federal Reserve Board in 2022 by then-President Biden and was reappointed in 2023. Her full term extends until January 2038. Cook is the first African-American woman to serve on the Federal Reserve Board and has supported maintaining policy independence and gradual adjustments to interest rates. The Supreme Court has not yet announced a specific timeline for addressing this case, but the legal community generally expects it to be one of the most closely watched legal and financial issues at the end of 2025.