The Supreme Court upholds Fed independence by saving Lisa Cook’s job—and also saves U.S. debt from a crisis

The Federal Reserve retains a special status in the government that shields it from interference by the White House, the Supreme Court said in a decision that has critical implications for the bond market. Justices ruled 5-4 on Monday President Donald Trump was wrong to try ousting Fed Governor Lisa Cook last August because she didn’t receive due process. Trump’s bid to fire her—the first such attempt ever—came as he was demanding the Fed lower interest rates, despite data showing inflation remained elevated, due, in part, to his tariffs. While Fed officials can be removed “for cause,” which has been interpreted to mean gross malfeasance or negligence, Cook was accused of mortgage fraud before joining the Fed. She has denied the charges and said she wasn’t given the chance to rebut the claims. Lower courts agreed with her. “Under our precedents, Cook was entitled to notice and some opportunity to respond prior to her termination,” Chief Justice Roberts wrote. He also asserted the Trump administration’s argument that a president can remove a member of the Fed “at any time, for any reason, without any notice before, and without any judicial check” would render the “for-cause protection into little more than at-will employment.” Protecting the Fed from the whims of a president is vital to the central bank’s duty to set monetary policy free of political considerations, Roberts explained. “Not only the fact of independence but also the appearance of independence is key to the Federal Reserve’s design,” he wrote. The Supreme Court decision on the Cook case followed a federal district judge’s dismissal earlier this year of subpoenas related to a Justice Department probe into former Fed Chair Jerome Powell. That judge said the subpoenas appeared to be meant to pressure Powell into lowering interest rates or resigning. The Justice Department has suspended its investigation, but Powell said he will