When President Donald J. Trump moved to fire Federal Reserve governor Lisa D. Cook this week, he touched off an immediate debate about what the law means when it says a Fed governor can be removed only “for cause.” Supporters of Ms. Cook insist that the standard requires proof of serious misconduct. Supporters of the White House argue that a president has wide discretion to determine what constitutes cause.
The disagreement is not new. In fact, it dates back nearly a century — to a moment when Congress accidentally erased the “for cause” protection and then scrambled to restore it.
A Clause That Mysteriously Disappeared
The Federal Reserve Act of 1913 created the Federal Reserve Board, a seven-member supervisory body in Washington. Its membership included the Secretary of the Treasury and the Comptroller of the Currency as ex officio members, along with five presidential appointees serving staggered 10-year terms “unless sooner removed for cause by the President.”
In 1933, amid emergency banking legislation, Congress omitted that clause. For roughly two years, Board members served at the President’s pleasure as a statutory matter — a change that largely escaped notice until 1935.
Senator Carter Glass of Virginia — who, as a representative and chairman of the House Committee on Banking and Currency, helped write the 1913 Federal Reserve Act — later admitted he must have been “asleep” when the 1933 change slipped through.
The 1935 Debate
When lawmakers discovered the omission during debate on the Banking Act of 1935, they were alarmed. Some, like Treasury Secretary Henry Morgenthau and several bankers who testified before the committee, even suggested that Fed officials should enjoy judicial-style protection, removable only through impeachment. Others floated a list of enumerated grounds — inefficiency, neglect of duty, malfeasance — modeled on language used in other regulatory statutes.
On the other side stood Marriner Eccles, Roosevelt’s influential central banker, who proposed making members of the Federal Reserve Board removable at will. Monetary policy, he argued, was inherently political, and the president had to control it to govern effectively.
The Senate ultimately rejected both extremes. It restored the “for cause” clause but left the term undefined.
A Supreme Court Shadow
The debate in Congress coincided with Humphrey’s Executor v. United States, a Supreme Court case over whether President Franklin D. Roosevelt could fire a commissioner at the Federal Trade Commission. The FTC’s statute had a tight formula: officials could be removed for “inefficiency, neglect of duty, or malfeasance in office, but for no other cause.”
In May 1935, the Court upheld that more restrictive enumerated removal provision and struck down Roosevelt’s dismissal. Congress could have imported the same language into the Federal Reserve Act. Instead, it stuck with the vaguer phrase “for cause.”
Not Completely Isolated From Politics
During the 1935 Senate hearings, Senator Carter Glass underscored that Congress had never intended the Federal Reserve to be entirely outside politics. The Washington board, he said, should be insulated from day-to-day White House control but not from all accountability—hence the requirement that a president state “cause” in writing when removing a member.
At an April 24, 1935, hearing, Glass put it this way:
“As to the political aspect of the thing, the proponents of the original act conceived the idea that there should be a measure of political influence in the supervising board here in Washington, and for that reason they made the Secretary of the Treasury and the Comptroller of the Currency ex-officio members of the Board, with a view that in the event the Board should ever pursue a policy that was manifestly damaging to the public interests, and there should be a change of administration, there would certainly be a change in at least two members of the Board, then composed of only seven members, and that the President of the United States, elected by the people, could, for cause stated in writing, dismiss one or more members of the Board and change its policy. So that there is that measure of political control in the Board.”
The sentiment reflected the disillusionment of the Depression. By then, many lawmakers believed that Federal Reserve policies in the early 1930s—particularly the failure to ease credit and stabilize banks—had deepened the crisis. That view later became conventional wisdom through Milton Friedman and Anna Schwartz’s A Monetary History of the United States, which argued that policy mistakes turned a severe recession into the Great Depression.
Against that backdrop, the Senate rejected both Marriner Eccles’s call for at-will presidential removal and proposals to secure members with impeachment-style tenure or the enumerated grounds used for the Federal Trade Commission in Humphrey’s Executor.
It also declined a tighter rule proposed by Winthrop W. Aldrich, chairman of Chase National Bank, who urged that members be “removable only for cause and after notice and hearing,” with “cause” limited to a narrow list borrowed from the Comptroller General statute—“permanent incapacity, inefficiency, neglect of duty, malfeasance, a felony or conduct involving moral turpitude”—and, crucially, “for no other cause and no other manner except by impeachment.” Aldrich read that language into the record as his preferred model.
The compromise was to preserve the president’s ability to intervene in extreme cases while protecting the Fed from functioning as a political arm of the executive—independence balanced with accountability.
In a separate colloquy with Frank C. Ferguson, a New Jersey banker, Glass added that the “cause” requirement did not entail a trial-like process:
Ferguson: “It seems to me that, within the last several weeks, I have read that it is contended that the President of the United States has the power of removal of Federal Reserve Board members.”
Glass: “Well, he has the power of removal for cause, in writing, to the Senate.”
Ferguson: “I did not know that the President had to prefer charges against them.”
Glass: “Well, he does not necessarily have to prefer charges against them; he has to give his reason for the removal.”
In that era, “prefer charges” was a legal term for filing formal written accusations that initiate an adjudicative process. The exchange suggests lawmakers expected “for cause” to require reason-giving, not a formal charging and hearing regime.
Congressional leaders also emphasized structural safeguards rather than litigation: 14-year staggered terms, Senate confirmation of presidential nominees, and a Federal Open Market Committee composed of the Board in Washington and Reserve Bank presidents. Removing a single member was not expected, by itself, to upend policy.
Why This History Matters Now
The question raised by Cook’s challenge is whether courts today will interpret “for cause” as a narrow, judicially enforceable standard or as the broader, more political concept that Sen. Glass described. Legal scholars such as Lev Menand argue that due process and evidentiary hearings are required. Editorials, like that of The New York Times, call for presidents to “prove it” in court.
But the record from 1935 suggests that Congress deliberately declined to demand that level of proof. It opted for vagueness, reason-giving, and political accountability instead.
That tension — between historical intent and modern expectations — is what makes the Cook case more than a personnel fight. It is a test of how far courts are willing to go in policing a standard that Congress once designed to be flexible.
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