Can the President Fire a Member of the Federal Reserve Board of Governors?

That’s exactly what he tried to do this past Monday. Trump announced on social media that Lisa Cook, appointed by Biden in 2022, is now fired. Things are about to get awkward.

First, Trump can’t simply fire Fed governors willy-nilly. Remember when DOGE was involved in all of those federal workforce lay-offs earlier in the year? I know, it seems like forever ago. The US Supreme Court ruled on the legality of those firings, including some at government corporations and ‘independent agencies’. The idea behind such entities is that they are supposed to be politically insulated and less bound by the typical red tape of the government. But Trump’s administration argued that the separation from the rest of the executive branch is a fiction and that there is no one else in charge of them if not the president. The Supreme Court agreed with the administration, with one exception.

The Federal Reserve, they reasoned, has historical precedence for being a quasi-government corporation with greater independence. This precedent includes the first and second Bank of the United States. So, while the president’s authority to hire and fire includes great discretion across most of the executive branch, he is more limited when it comes to the administration of the Federal Reserve. Specifically, he can only fire Lisa Cook or any other member of the Board of Governors “for cause”.

“For cause” is a funny phrase because, like so many legal definitions, it’s not written in stone. It changes with the context of the use, the role to which it’s applied, and prudential standards of the day. But broadly, it refers to ‘inefficiency, neglect of duty, or malfeasance in office’ (Humphrey’s Executor, known as the INM standard). Lisa Cook clearly wasn’t inefficient or neglectful of duty. What does ‘malfeasance in office’ mean? Answer: “A wrongful act committed in the execution of one’s duties that caused injury to others.”

So, has Trump found cause to fire Lisa Cook? He thinks so. In particular, Lisa Cook purchased 3 properties in 2021. On the mortgage applications, she allegedly listed one as an investment property, and two were for “primary” residences on the standard mortgage application (section 4a). This isn’t a slam dunk for the administration. It’s *possible* that they were both intended as primary residences at the different mortgage applications times. Bill Pulte, US Director of Federal Housing, also notes that Lisa Cook listed her Georgia property on a 2023 disclosure as her ‘personal residence’ when she had listed it ‘for rent’ in September of 2022.

The Supreme Court just affirmed in May 2025 that the president needs a darn good reason to remove a Fed governor from office. “For cause” is usually limited to during the time in office, and Cook’s 2021 property purchases were prior to her 2022 nomination and confirmation to the Board of Governors. So, her crime would specifically have been ‘failure to notify her lender that one of the properties was no longer her primary residence’. This is a standard condition of a mortgage. And it’s also why it’s so easy to commit mortgage fraud. Many people don’t know or don’t remember that the clause exists. BTW, there is a 0.5-1.0% mortgage interest rate discount to borrow for a personal residence versus an investment property, and a 0.25-0.5% discount versus a second personal residence… So there is an incentive for borrowers to forget the rules.

An important evidentiary wrinkle is that we don’t currently know that she failed to notify her lender that a property ceased to be her ‘primary’ residence.

Lisa Cook and her lawyers don’t think the case for firing is strong. She filed suit requesting relief, though doesn’t deny wrongdoing and acknowledges possible ‘errors’. In her hearing request, she contests whether due process has been followed and whether the president has provided adequate evidence of intentional wrong-doing in the execution of her duties. Specifically, she A) denies the president’s ability to fire her for her personal offenses, B) claims an inappropriate process was followed, and C) notes the lack of evidence (despite very public tweets of awkwardly incomplete page segments). The hearing is scheduled for today at 10 AM.

Why is this such a big deal? The reason that the legality matters is because the Fed’s political independence matters. Presidents almost always want lower interest rates. But interest rates are determined by the Federal Reserve Open Market Committee (FOMC), which itself includes the seven-member Federal Reserve Board of Governors. Trump wants to ‘pack the board’ with people who will pursue his desired interest rate policy. But those board members have 14-year terms in order to help avoid such influence. See the below table. Right now, there is only one member of the board that Biden didn’t nominate or re-nominate. Notice that the list only includes six names. There was a resignation earlier this month and Trump has nominated Stephen Miran, who may or may not be willing to act under the influence of the president.

It would be unusual for all of the other board members to serve out their entire terms, but if they did, then five of the six current members would remain in office beyond the end of Trump’s second term. Jerome Powell’s term expires soonest and that’s not until early 2028 — Trump’s last year in office. Therefore, given Trump’s lack of influence over current members, the only way to change the composition of the board is to find ‘for cause’ reasons to fire current members. That’s what Trump is up to. He’s trying to exert greater influence over the Board and over the FOMC so that he can get lower interest rates. This is no mere speculation on my part. He’s made his desires explicitly clear.

Lisa Cook’s request for a hearing is worth reading.

UPDATE: See my live updates on X.

Previously, I described the structure of the Federal Reserve and how its design tries to provide political insulation, while also limiting the influence of private banks.