Federal Reserve independence secures an important, but not final, victory at US Supreme Court

The Federal Reserve, under pressure from President Donald Trump to cut interest rates and bend to his will, just got an important assist from the U.S. Supreme Court.

In Trump v. Cook, the justices took up the case involving Trump’s decision to terminate Lisa Cook, a member of the powerful policymaking Board of Governors of the Federal Reserve. On June 29, 2026, Cook and the Fed prevailed. In a 5-4 opinion written by Chief Justice John Roberts, the court upheld a lower court’s decision to keep Cook in her role while her case proceeds on whether she was terminated “for cause.”

The high court also held that Trump didn’t meet the due process requirements for dismissing a board governor when he “fired” her via a social media post. Trump claimed Cook had committed mortgage fraud, even though she had not been found guilty of any wrongdoing.

As a scholar of employment law, I had expected the court to side with Cook to some degree. But other recent Supreme Court cases have gone the other way, protecting the president’s authority to fire other high-level government officials at will.

Same court, different opinions

The court’s Cook decision and its constraints on presidential power stand in contrast to its rulings regarding other federal agencies. On the same day, the conservative majority sided with Trump when it ruled in Trump v. Slaughter that a “for cause” provision limiting his right to fire the head of the Federal Trade Commission was unconstitutional.

In earlier rulings, the court similarly affirmed a president’s right to fire leadership at the National Labor Relations Board and the Consumer Financial Protection Bureau.

As I’ve previously written, it’s important to remember that a vast majority of U.S. workers are employed at will, which means they can be fired for any reason and terminated from their jobs with no advance notice. By contrast, Cook’s position is covered by the Federal Reserve Act, which states that board members are appointed by the president to 14-year terms. They can be terminated by the president, but only for cause.

The same was true, however, at the Federal Trade Commission, where agency heads can be terminated only for cause. But in the Slaughter case, the conservative majority deemed the cause provision unconstitutional.

In Cook’s case, the government didn’t try to argue that the “cause” provision was unconstitutional. It waived that argument early on in the case. However, in upholding the lower court ruling in Cook, the court more or less assumed that the cause provision in the Federal Reserve Act is valid.

How to make sense of this contradiction?

As Justice Amy Coney Barrett noted in a dissenting opinion, the majority opinion in Cook was “in serious tension” with Slaughter. She also criticized the majority opinion for addressing “a constitutional issue” that was “outside the scope of this case.”

Justice Sonia Sotomayor made a similar point in her dissent in Trump v. Slaughter, characterizing the majority’s treatment of the Fed as an “ad hoc … exception” to the court’s “totalizing” and “half-baked” interpretation of presidential power. Sotomayor noted that Slaughter creates “line-drawing” problems that were previously absent under long-standing precedent protecting FTC agency heads from dismissal.

When facts matter as much as the law

It’s difficult to reconcile the two cases based on legal reasoning alone. That doesn’t necessarily make the outcome wrong. But it does suggest it’s important to consider other factors at play – namely, what’s happening out in the real world, beyond the courthouse. This interpretation of the law is known as “legal realism.”

Legal realism dates back to the 1930s, based on the commonsense critique that predictions about the law require some incorporation of the facts rather than purely abstract notions of legal rights.

Legal realism extends beyond the idea that a judge’s political ideology might influence outcomes, which is today a common basis for pundits to explain court decisions. Instead, legal realism acknowledges that facts on the ground sometimes matter more than the law.

Legal realism is useful here because there’s one overriding fact that makes Cook’s case distinct from the others involving presidential power over federal agencies. Simply put, the Fed is special. It preserves price stability and safeguards the economy as a whole over the long term by rescuing it in bad times and preventing it from overheating in good times. Former Fed Chair Jerome Powell described it as a “first responder in times of financial crisis.”

But to do its job well, the Fed needs to be insulated from outside political forces. That’s why Wall Street and global markets more broadly were watching the decision closely.

The Fed’s unique role

In Cook, both the majority and concurring opinions frequently referred to the Fed’s vital role in the modern economy.

The majority opinion invoked “the Federal Reserve’s unique historical status and role” and warned of the economic “calamaties” that would come with “political manipulation of monetary policy.” And Roberts seemed to suggest that the Cook opinion is all the more important in light of the Slaughter ruling, noting the importance of leaving no public “doubt” as to the independence of “one of our Nation’s (and the world’s) most important financial institutions.”

Of the dissenters, only Justice Clarence Thomas took the position that the president should have had the power to fire Cook at will. The rest objected on various technical and procedural grounds.

That is, at least by today’s standards, something like a consensus.

Elizabeth C. Tippett does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.