WASHINGTON — In a case in which credit unions are tangentially involved, the Supreme Court ruled 5-4 that Federal Reserve Gov. Lisa Cook can remain in her position while challenging President Donald Trump’s attempt to remove her, drawing a sharp distinction between the Federal Reserve and other independent agencies whose leaders the court said may be subject to broader presidential removal authority.
Chief Justice John Roberts wrote that Trump’s attempt to remove Cook failed because she was not afforded the procedural protections required under the Federal Reserve Act. The court emphasized that Federal Reserve governors do not serve at the pleasure of the president and are entitled to statutory due process before being removed.
The ruling came the same day the court separately held in Trump v. Slaughter that presidents have broad authority to remove commissioners at the Federal Trade Commission, overruling the 1935 Humphrey’s Executor precedent. But the justices stopped short of extending that reasoning to the Federal Reserve, preserving—for now—the central bank’s longstanding independence.
‘Independence is Essential’
Cook, who was appointed by former President Joe Biden to a term that expires in 2038, said the decision protects the Federal Reserve’s ability to carry out its congressional mandate free from political interference.
“The decision recognizes that Federal Reserve independence is essential to fulfilling the congressional mandate of price stability and maximum employment,” Cook said in a statement, according to Reuters.
Trump sought to remove Cook last year after alleging she committed mortgage fraud before joining the Federal Reserve Board. Cook has denied the allegations, arguing they were a pretext for removing her because she refused political pressure over monetary policy. The case now returns to lower courts for further proceedings, and Trump indicated he may pursue another attempt consistent with the court’s procedural requirements.
Home Loans Involve Credit Unions
The mortgage allegations centered on three home loans Cook obtained in 2021, before joining the Federal Reserve. According to Reuters’ review of public records, two of the mortgages were issued by credit unions: a $203,000 loan on an Ann Arbor, Michigan, home originated by the University of Michigan Credit Union and two loans on Massachusetts and Georgia properties originated by Bank Fund Credit Union. Reuters reported that Cook’s financial disclosures listed mortgages on personal residences and an investment property and that legal and financial experts disputed claims that the transactions demonstrated mortgage fraud.
