^{Photo: TheStreet}

A rare intervention by the Fed chair

Federal Reserve Chair Jerome Powell is planning to attend oral arguments at the U.S. Supreme Court on Wednesday in a closely watched case that challenges President Donald Trump’s attempt to remove Federal Reserve Governor Lisa Cook. Powell’s presence in the courtroom is highly unusual for a sitting Fed chair and reflects how seriously the central bank views the legal and institutional implications of the dispute.

According to people familiar with the matter, Powell believes the case goes beyond the fate of a single governor and directly touches on whether the Federal Reserve can operate independently of political pressure, a principle that has guided U.S. monetary policy for decades.

The dispute over Lisa Cook’s removal

The legal battle stems from Trump’s announcement in late August that he was firing Cook from the seven-member Federal Reserve Board of Governors. Trump cited allegations of mortgage fraud related to two homes owned by Cook as justification for the move.

Cook has firmly denied any wrongdoing. She has not been charged with a crime, and no court has found evidence to support the claims. In response, Cook filed suit in federal court in Washington, D.C., arguing that the president lacked legal authority to remove her under the circumstances.

In September, a district court judge blocked Trump from carrying out the dismissal while the case proceeds. That decision was later upheld by a federal appeals court, setting the stage for the Supreme Court to weigh in.

Why the case matters to the Fed

For the Federal Reserve, the outcome could have sweeping consequences. Governors are appointed to long terms precisely to insulate monetary policy from short-term political influence. The Fed currently oversees an economy worth more than $27 trillion, sets benchmark interest rates that influence everything from mortgages to business loans, and plays a central role in financial stability.

Within the central bank, the question of whether a president can remove a Fed governor “for cause” is viewed as potentially existential. If the court sides with Trump, it could weaken the Fed’s independence and reshape how future administrations interact with the institution.

Powell’s own legal troubles add another layer

Powell’s planned attendance also comes amid heightened scrutiny of his own position. Earlier this month, he disclosed that he is under criminal investigation by the U.S. Attorney’s Office in Washington, D.C., related to a multi-billion-dollar renovation of the Federal Reserve’s headquarters and statements he made to Congress about the project.

In a rare and forceful public statement issued in January, Powell suggested the investigation was being used as leverage against the central bank. He argued that the real motivation was frustration within the White House over the Fed’s refusal to cut interest rates as aggressively as Trump had demanded last year.

“The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President,” Powell said at the time.

Government pushback and the Supreme Court fight

The Justice Department has asked the Supreme Court to overturn the lower court rulings that prevented Cook’s removal. In its filings, the department argues that the decisions represent improper judicial interference with the president’s authority to remove executive branch officials, including members of the Federal Reserve Board, when cause is asserted.

Legal scholars note that while similar cases have arisen in the past involving independent agencies, it is rare for a dispute involving the Federal Reserve to reach this level, given the institution’s unique role in the U.S. economy.

What comes next

The Supreme Court’s decision could clarify, for the first time in years, the boundaries between presidential power and central bank independence. Markets, policymakers, and global investors are watching closely, aware that even small changes to the Fed’s governance framework could ripple through interest rates, financial markets, and the broader economy.

Powell’s decision to attend the arguments in person sends a clear signal: the Federal Reserve views this case not as routine litigation, but as a defining moment for its autonomy and credibility.

‍