White House escalates its personnel offensive at the Federal Reserve Board.

On October 7, the White House released a presidential memorandum announcing the formation of an investigative committee and scheduling a closed-door White House hearing to determine whether there is "good cause" to remove Federal Reserve Governor Lisa Cook. The hearing is set for November 5, two days after congressional elections. The move pushes Cook into a rare legal battle and reignites concerns about Fed independence.

According to the memo, the newly formed committee will investigate mortgage fraud allegations against Cook. Members include Trump's chief economic policy advisor Kevin Hassett, Equal Employment Opportunity Commission Chair Andrea Lucas, and acting Office of Government Ethics Director Keith Sonderling. These members, their representatives, or Justice Department personnel will question Cook, with the hearing lasting no more than four hours.

The hearing will be held behind closed doors on November 5. The committee must submit recommendations to Trump promptly after Cook submits a post-hearing statement by November 10. In the notice, Trump said: "As President, my duty is to ensure the laws are faithfully executed, including dismissing subordinates who are not trustworthy, cannot tell the truth, and do not follow the law." He said the committee will assist him in this duty, investigate the allegations against Cook, and report whether there is "good cause" to remove her.

Cook's lawyers, Abbe Lowell and Norm Eisen, issued a statement saying that "as long as this hearing maintains basic objectivity," the conclusion must be that Cook did not commit mortgage fraud and there is no reason to remove her from the Fed Board. They said Cook is willing to use this opportunity to state the facts, clear her name, and prove there is no legal basis for her dismissal. The lawyers also said they have communicated with the White House about the procedures. However, they previously expressed "serious doubts" about whether this "hearing" is legal and meets legal requirements.

Supreme Court's Limited Ruling Leaves New Battleground

Trump's attempt to remove Cook has lasted over a year. In August 2025, Trump first tried to fire Cook, announcing the decision on social media based on allegations by senior government officials that Cook may have falsely listed a second home as her primary residence in a mortgage application to obtain more favorable loan terms. Cook denied the allegations, calling them fabricated false reasons to provide a legal pretext for her removal. Her lawyer Lowell called the allegations "baseless and untrue." Cook herself denied any evidence that she intentionally provided false information or intended to deceive financial institutions. Her lawyers argued that Cook signing a "primary residence" mortgage agreement for a property in Atlanta was a "completely unintentional oversight," and she made other disclosures showing the property was a vacation home.

Cook then filed a lawsuit. The case eventually reached the U.S. Supreme Court. In June of this year, the Supreme Court ruled 5-4 that Trump cannot immediately fire Cook because he did not give her sufficient advance notice and opportunity to respond to the allegations. The majority justices emphasized that Fed governors should be protected from political interference, and the President can only remove them "for good cause," not "at will." Chief Justice John Roberts wrote in the opinion that Congress "has good reason to limit the President's power to remove governors," noting the long tradition that the Fed's monetary policy decisions should be free from White House intervention. He also said: "We have no reason to leave the public in suspense or sow doubt about the status of one of the most important financial institutions in the country and the world."

However, the Supreme Court did not provide detailed standards for defining "good cause," nor did it rule on whether the allegations against Cook, if true, would be sufficient to remove her during her 14-year term. Roberts said the Supreme Court ruled on "limited grounds" and left open the possibility that if Trump chooses to try again to remove Cook and gives her a chance to defend herself, the case could evolve into a new legal battle, and Cook could appeal to the courts again. It is precisely this ruling based on "limited grounds" that left room for the White House to restart the process.

Mortgage Allegations and Cook's Defense

The allegations against Cook were initially raised by Bill Pulte, Director of the Federal Housing Finance Agency. Pulte is a staunch Trump ally. He said on social media that Cook stated in a mortgage for a property in Ann Arbor, Michigan, that it would be her primary residence, but two weeks later made the same statement in a mortgage for a property in Georgia. Cook has not been criminally charged and denies all wrongdoing. Cook said in the lawsuit that any alleged discrepancy may have been a clerical error and does not constitute the serious misconduct required by law to support removal "for good cause." Her lawyers also emphasized that Cook committed no fraud.

The Trump administration is trying to use the new committee and White House hearing to remedy the procedural deficiency previously noted by the Supreme Court, namely the failure to give Cook notice and an opportunity to respond. Legally, Section 10 of the Federal Reserve Act states that Federal Reserve Board members may be "removed by the President for good cause." Courts typically interpret "good cause" as inefficiency, neglect of duty, or malfeasance in office. Roberts noted in the opinion that the Trump administration believes "good cause" can be "any concern" about a governor's "conduct, ability, suitability, or competence" as long as it is not just policy disagreement, a position that is "too loose"; while Cook believes "good cause" can only be limited to misconduct during tenure or failure to meet qualifications, a position that is "too strict." The Supreme Court's refusal to provide a clear standard means both sides will continue to clash over this key definition. Cook also argues that the conduct she is accused of occurred one year before her appointment, is unrelated to her duties as a Fed governor, and therefore does not meet the removal standard. The Supreme Court has not yet ruled on whether the allegations against her, if true, would be sufficient grounds for dismissal.

Stress Test for Fed Independence

Trump's sustained pressure on the Fed, including repeated threats to fire former Fed Chair Jerome Powell, has tested Fed independence. Economists generally believe that central bank independence ensures U.S. monetary policy prioritizes long-term economic stability over short-term political gains. Roberts also mentioned in the opinion the long tradition of letting the Fed conduct monetary policy free from White House intervention. Currently, Powell remains on the Fed Board after his term as Chair ended in May of this year. Trump also accused Powell of possible financial misconduct in the Fed building renovation project, but the related Justice Department criminal investigation has ended, and an independent oversight body also dismissed the claim last month. Trump appointed Kevin Warsh to succeed Powell as Fed Chair in May of this year. Last month, the Fed raised interest rates under Warsh's leadership. Cook was appointed as a Fed governor by former President Biden in 2022 and reappointed in 2023, with a term through 2038. She is the first Black woman to serve on the Federal Reserve Board. Materials show that Cook has consistently voted with the majority in Federal Open Market Committee votes. Evercore ISI analyst Krishna Guha wrote in a report that Trump seems to believe the Fed turned hawkish because his chosen Chair Warsh is constrained by a hawkish and politically hostile Fed Board. Trump's formation of an investigative committee "once again increases the threat to Fed independence" and may be counterproductive from the President's perspective of wanting lower interest rates. Senate Banking Committee ranking Democrat Elizabeth Warren criticized the hearing as a "kangaroo court" and a "dangerous attempt by Trump to illegally take over America's central bank."

If Cook is ultimately successfully removed, it will create a vacancy on the seven-member Fed Board. The Senate is responsible for confirming the President's Fed nominees, and scheduling the hearing two days after the election also intertwines the matter with the fight for congressional control.

Can It Succeed? Courts May Intervene Again

From a legal possibility standpoint, Trump may still succeed in removing Cook. The Supreme Court previously blocked immediate removal mainly due to procedural defects, not a complete rejection of the President's removal power. As long as the White House provides notice and an opportunity to defend, Trump can try again. Roberts also explicitly envisioned that if Trump starts a new removal process, the case could be replaced by a new legal battle, and Cook could still appeal to the courts again. The President's clearest power over the Fed is by filling Board vacancies and placing some appointees in leadership positions including Chair. The Fed is theoretically designed as a non-political institution that sets interest rate policy considering only the best economic interests. But in reality, the Fed still operates in a political environment: its leaders work closely with the Treasury, especially during crises, and maintain contact with congressional lawmakers; its decisions must also consider the economic impact of tax cuts or large spending plans pushed by the President and Congress. The core argument for central bank independence is that if investors and consumers believe the central bank will take necessary measures without fear of political consequences, the economy will perform better over the long term. Economic research shows that central banks with autonomy have a better record of controlling inflation. Supporters of independent central banks argue that freedom from political pressure allows the central bank to take necessary but sometimes unpopular measures, such as raising interest rates to fight inflation. Politicians generally prefer low interest rates because cheaper money stimulates current consumption and economic growth.

Regardless of the final outcome, the White House investigation and White House hearing have already constituted the latest stress test for Fed independence. The case is likely to return to the courts again, and the market will closely watch whether this battle over Cook's fate will change the balance of power on the Fed Board and policy expectations.