Supreme Court Showdown Puts the Fed’s Independence – and Trump’s Power – on Trial

AP, USA Today, CNN, FOX News, and Business Insider contributed to this report.

Federal Reserve Chair Jerome Powell is taking an unusually public stand this week, showing up in person at the Supreme Court as the justices hear arguments in a case that could reshape the balance of power between the White House and the central bank.

At issue is President Donald Trump’s unprecedented attempt to fire Federal Reserve Governor Lisa Cook – and, more broadly, whether the Supreme Court will continue to shield the Fed from direct presidential control.

Powell’s decision to attend Wednesday’s oral arguments is no small gesture. Fed chairs almost never appear at the court, and his presence signals just how high the stakes have become. According to people familiar with the matter, Powell plans to sit in as the justices weigh whether Trump can remove Cook, one of seven governors on the Fed’s powerful board.

Trump announced last August that he intended to fire Cook, accusing her of mortgage fraud related to paperwork she filed years before joining the Fed. Cook has denied the allegations, has not been charged with any crime, and says the accusations are a pretext to punish her for her views on monetary policy.

The Supreme Court temporarily blocked Cook’s removal in October, allowing her to remain on the board while the case proceeds. Now, the justices are deciding whether Trump’s move crossed a legal line – and whether a president can push aside a Fed governor “for cause” without meaningful judicial review.

Powell’s show of support marks a shift in tone. For much of the past year, he tried to respond quietly to Trump’s attacks. That changed dramatically this month, after Powell revealed that the Trump administration had subpoenaed the Fed and threatened what Powell called an unprecedented criminal indictment of a sitting Fed chair.

In a video statement released Jan. 11, Powell blasted the subpoenas as “pretexts” meant to pressure him into slashing interest rates. While the Fed cut rates three times late last year – bringing them down to roughly 3.6% – Trump has repeatedly insisted they should be closer to 1%, a level most economists say would risk reigniting inflation.

On paper, the dispute is about one Fed governor. In reality, it’s about whether any president can bend the central bank to political will.

If Trump succeeds in removing Cook, he would be able to appoint her replacement – giving Trump-aligned picks a majority on the Fed’s board. That could tilt decisions on interest rates, bank regulation and financial stability in ways no modern president has been able to engineer.

“This case is about much more than Cook,” said Lev Menand, a Columbia University law professor and former Treasury official. “It’s really about whether the court is going to give a roadmap for removing other governors – including Jerome Powell.”

The timing only raises the stakes. The Supreme Court is already considering whether Trump’s sweeping tariffs are legal, another major test of presidential power over the economy. Together, the cases force the justices to confront how much control one person should have over economic levers that affect markets worldwide.

Trump has never hidden his frustration with the Federal Reserve. He has repeatedly accused Powell and the Fed of holding back economic growth by keeping rates too high – complaints that intensified as polls began showing voter dissatisfaction with Trump’s handling of the economy.

Lower interest rates could boost short-term growth, lower borrowing costs and make servicing the national debt cheaper. Politically, that’s appealing heading into midterm elections. But the Fed’s job isn’t to juice election-year numbers – it’s to balance growth with inflation risks over the long run.

That tension is why every living former Fed chair – including Janet Yellen, Ben Bernanke and Alan Greenspan – submitted briefs warning the Supreme Court that undermining Fed independence could damage the US economy and global financial system.

“The Fed’s ability to fight inflation depends not only on its insulation from political pressure,” they wrote, “but also on the public’s perception of that independence.”

The US Chamber of Commerce echoed that view, calling Fed independence “essential for a strong economy and financial stability.”

The Trump administration has brushed those concerns aside, arguing that they’re policy debates – not legal ones. The Justice Department says the only question before the court is whether Trump lawfully identified “cause” to remove Cook.

Despite its 6–3 conservative majority, the Supreme Court has already hinted that the Federal Reserve may be different from other independent agencies.

In recent years, the court has allowed Trump to temporarily remove leaders at agencies like the FTC, the National Labor Relations Board and the Merit Systems Protection Board. But in a key decision last May, the justices went out of their way to describe the Fed as “uniquely structured” and rooted in a “distinct historical tradition” dating back to the First and Second Banks of the United States.

That language – just 26 words long – now sits at the heart of Cook’s defense.

By allowing Cook to stay on the job while her case proceeds, the court signaled skepticism about Trump’s arguments. That skepticism may be reinforced by the Justice Department’s separate investigation into Powell, which critics say makes the administration’s broader goal clear: gaining leverage over the central bank.

“It creates a context that undermines Trump’s claims,” Menand said. “It looks less like accountability and more like an effort to control the Fed.”

No president has ever fired a sitting Fed governor in the institution’s 111-year history. If Trump wins, that changes overnight.

The justices could rule narrowly, focusing only on whether Cook can be removed while litigation continues. Or they could settle the larger question of whether the Fed’s “for cause” protections actually mean anything at all.

Either way, the outcome will ripple far beyond Washington. Markets, banks and investors are watching closely, aware that the Fed’s credibility – and the stability of US monetary policy – may hinge on how much independence the Supreme Court is willing to preserve.

As Powell sits quietly in the courtroom Wednesday, the message is unmistakable: this fight isn’t just about one governor, or even one president. It’s about whether the Federal Reserve remains insulated from politics – or becomes just another agency subject to the whims of whoever occupies the Oval Office.