President Trump’s attempt to fire Lisa Cook, a Federal Reserve governor, signaled a shift in tactics that appeared tailored to that body’s special legal status.
Whether it succeeds will turn on the meaning of a two-word phrase: “for cause.”
In removing the leaders of other independent agencies, Mr. Trump has given no reasons, saying he has the unilateral constitutional authority to control the executive branch, even in the face of congressional efforts to shield officials from political interference. The Supreme Court has lately sided with that view, rejecting statutes that have been on the books for decades requiring presidents to supply a reason for removing officials.
But with the Fed, Mr. Trump has tried something new. This time, he explained in a letter to Ms. Cook on Monday, there was “sufficient cause” to remove her. He accused Ms. Cook of mortgage fraud by designating two different properties as her primary residence in 2021, the year before she was appointed by President Joseph R. Biden Jr.
Ms. Cook responded that “no cause exists under the law” to allow her removal, and her lawyer said she would sue to keep her job.
That lawsuit will raise a series of questions with no definitive answers: What is sufficient cause? Must it be job-related? And who decides?
In Ms. Cook’s case, her actions preceded and so did not arise from her work at the Fed. She has not been charged with a crime, and has not had an opportunity to present her side to a judge or other neutral party.
The Supreme Court has said in recent decisions that the separation of powers required by the Constitution forbids Congress from insulating most executive branch officials from presidential control.
But the court has also indicated that the Fed is a special case, a uniquely powerful institution whose independence requires the president to have a satisfactory reason for firing its leaders.
That is what the Federal Reserve Act, first enacted in 1913, calls for: “Each member shall hold office for a term of 14 years from the expiration of the term of his predecessor, unless sooner removed for cause by the president.”
Mr. Trump’s move was characteristic of his second term, which has been marked by a relentless effort to expand presidential power in nearly every aspect of the government. Mr. Trump has been particularly frustrated by the Federal Reserve Board, repeatedly lashing out at Jerome H. Powell, its chair, for not lowering interest rates.
Kush Desai, a White House spokesman, said Mr. Trump had “exercised his lawful authority” in removing Ms. Cook. Mr. Desai cited the Federal Reserve Act and linked the accusations of mortgage fraud to Ms. Cook’s official responsibilities, adding that the president had determined that “there was cause to remove a governor who was credibly accused of lying in financial documents from a highly sensitive position overseeing financial institutions.”
The legal terrain is surprisingly uncharted because attempts to remove leaders of independent agencies for cause are exceedingly rare. Until Monday, no president had tried to fire a Federal Reserve governor.
In a 2013 article in The Cornell Law Review, Kirti Datla and Richard L. Revesz found that “the lack of litigation around the subject suggests that presidents err on the side of caution.”
Legal experts said the Supreme Court’s recognition of the Fed’s central role in the American economy suggested that it would require compelling proof and a clear connection between the asserted misconduct and Ms. Cook’s official duties.
“In setting up an expert agency that is separate and independent from the president in one of the most economically consequential arenas possible, would they have wanted that to be a game of gotcha?” Julian Davis Mortenson, a law professor at the University of Michigan, said of Congress. “It feels to me like the threshold for for-cause removal in the context of the underlying goals for the agency would be higher.”
Lev Menand, a law professor at Columbia, said that without the 1913 law, “it increases the ability of the president to drive people out of office for political reasons, something Congress plainly wanted to avoid for the Fed.”
Asked what kinds of misconduct would satisfy the “for cause” requirement,” Professor Menand listed a few: accepting a bribe, engaging in other corruption in office and failing to attend meetings. All of his examples were connected to her official duties.
More than 30 federal laws say that leaders of executive agencies, including the Federal Trade Commission and the National Labor Relations Board, can only be removed for some combination of “inefficiency, neglect of duty and malfeasance.” Another 20 or so, like the one governing the Fed, allow removal of agency leaders for cause.
The difference may matter. Writing in The Columbia Law Review in 2021, Professor Menand and Jane Manners, now a law professor at Fordham, said that “good cause” included not just “inefficiency, neglect of duty and malfeasance” but a broader category of misdeed that includes “immorality, ineligibility, offenses involving moral turpitude and conviction of a crime.”
That means, they wrote, that “the president’s power to remove Federal Reserve governors is greater than it is over many other independent agency heads.”
Similarly, the Cornell Law Review article concluded that the differences between the two standards may be meaningful, and that statutes that allow appointees to be removed for cause confer “the weakest protection” from presidential intervention.
In a Supreme Court filing in April, Mr. Trump’s lawyers acknowledged that the Supreme Court had repeatedly said the Fed may deserve special consideration.
Writing for the majority in a 2020 decision that said the president was free to fire the director of the Consumer Financial Protection Bureau without cause, Chief Justice John G. Roberts Jr. said the Fed may be able to claim “a special historical status.” In a 2024 dissent, Justice Samuel A. Alito Jr. likewise said the Fed was “a unique institution with a unique historical background.”
Justice Brett M. Kavanaugh, then a judge on the U.S. Court of Appeals for the District of Columbia Circuit, made a similar point in a 2009 article in The Minnesota Law Review. “In some situations,” he wrote, “it may be worthwhile to insulate particular agencies from direct presidential oversight or control — the Federal Reserve Board may be one example, due to its power to directly affect the short-term functioning of the U.S. economy by setting interest rates and adjusting the money supply.”
The court granted a request from the administration in May, letting Mr. Trump fire leaders of the other agencies, the Merit Systems Protection Board and the National Labor Relations Board, without cause, despite statutory protections requiring a good reason.
“Because the Constitution vests the executive power in the president,” the court said in an unsigned opinion, “he may remove without cause executive officers who exercise that power on his behalf.”
But the opinion carved out the Fed. “The Federal Reserve is a uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States,” the opinion said.
In dissent, Justice Elena Kagan said she was “glad to hear this,” even as she questioned “the creation of a bespoke Federal Reserve exception.”
Professor Menand said Mr. Trump’s efforts to remove Ms. Cook had profound implications.
“This case,” he said, “is going to determine whether the Federal Reserve going forward is going to be under the control of the White House or not.”
Adam Liptak covers the Supreme Court and writes Sidebar, a column on legal developments. A graduate of Yale Law School, he practiced law for 14 years before joining The Times in 2002.
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