The court battle over the future of the Federal Reserve begins today
At 10 a.m., a Washington Federal Court, DC, will hold an audience on the withdrawal of Lisa Cook from the Federal Reserve. But the Battle of the Tribunal will shape much more than the future of Cook’s mandate at the Central Bank.
The challenge is the independence of the federal reserve, the most important central bank in the world.
As the chief of JPMorgan noted, the American economist Michael Feroli, Cook draws from the Fed, in the event of success, “would create the second vacancy on the board of directors in less than a month and would allow the president to move this body in a direction more to his taste.”
“If the president succeeded, the result would be crucial,” added Feroli.
Obtaining a majority on the Fed Board of Directors does not automatically give Trump’s power to increase, reduce or maintain unchanged interest rates, but its candidates may, as of February, refuse to renew or confirm a new four -year term for the regional presidents of the Fed Bank who obtain a vote on interest rates.
These presidents are essential to the Federal Open Market Committee of 12 members, which includes the president of the Fed, six governors of the Fed and five regional presidents of the Fed. These presidents come from banks from the New York and San Francisco Federal Reserve in Chicago and Atlanta.
The refusal to confirm certain regional presidents until they are to the taste of Trump’s candidates could considerably change the functioning of the Fed rate adjustment committee.
Already, two of Trump’s candidates are part of the Fed Board of Directors. Michelle Bowman and Christopher Waller abstained from a vote in 2023 to approve the president of Chicago Fed, Austan Goolsbee, a former high -level economic advisor by President Barack Obama, at the rate adjustment FOMC, according to files obtained by Bloomberg News by an open file request.
Friday’s judicial argument will focus on allegations formulated by the director of the Federal Housing Finance Authority of Trump, Bill Pulte. He said Cook had committed mortgage fraud before becoming Governor of the Fed.
For Cook, his lawyers are looking for an immediate and emergency prohibition prescription “which would confirm his ability to continue his role while the advantages of his case are heard.
The broader cook trial against the administration is looking for a “declaration that the president of President Trump on August 25, 2025 has allegedly dismissed … is illegal and zero and that Governor Cook remains an active member of the Governors of the Federal Reserve.” It also requests a declaration of the court according to which “an underestimated allegation of mortgage fraud before the confirmation of a governor is not a reason for dismissal.”
Under the legislation which created the Federal Reserve, the only reason why a governor can be withdrawn from his role is “for good reason”, which is generally considered a kind of reprehensible acts. Trump’s letter of dismissal to Cook said that the administration considers that it “may have made false declarations on one or more mortgage requests”.
Cook’s lawyers highlighted the use of “May” in Trump’s letter, saying Pulte’s statements are not founded.
