Fed Chair Powell Will Attend Supreme Court Hearing in Trump’s Attempt To Fire Lisa Cook

Federal Reserve Chair Jerome Powell will attend oral arguments this week in the Supreme Court case over President Donald Trump's attempt to fire Fed Gov. Lisa Cook, a source familiar with the matter tells Realtor.com®.

Powell's presence at the hearing Wednesday will elevate the drama of an already high-profile case, in which Cook hopes to block Trump's attempt to fire her over allegations that she committed mortgage fraud.

Cook, one of the 12 members of the Federal Open Market Committee (FOMC) that sets interest rate policy, is a Biden appointee who consistently votes alongside Powell on rate decisions, including when the panel has defied Trump's calls for lower interest rates.

Her removal from the FOMC would allow Trump to nominate a replacement who agrees with the president's view that interest rates should be much lower, reducing borrowing costs for the government and consumers.

Powell has avoided commenting publicly on Cook's case, citing the ongoing legal process, but his attendance in court may be intended to send a silent message on central bank independence amid Trump's pressure campaign for lower interest rates. The Associated Press first reported Powell's plan to attend the hearing.

"This is a sign of solidarity from Chair Powell," says Realtor.com Senior Economist Jake Krimmel. "He's standing in support of Lisa Cook as a colleague he works with on a daily basis, as a fellow member of the FOMC, and as a public servant."

Trump in August attempted to fire Cook over allegations that she committed mortgage fraud by claiming two separate properties as her primary residence on loan applications. Cook challenged the move by claiming she wasn't granted due process and argued that the allegations didn't constitute sufficient cause for removal.

A lower court judge temporarily blocked Cook's removal, writing that Cook was "substantially likely" to succeed in her argument that Trump violated the Federal Reserve Act in firing her. An appeals court upheld that ruling, leading the White House to ask the Supreme Court to intervene.

Following the appeals ruling, White House spokesman Kush Desai told Realtor.com in a statement that Trump "lawfully removed Lisa Cook for cause from the Federal Reserve Board of Governors."

"We look forward to ultimate victory after presenting our oral arguments before the Supreme Court in January," he added.

The White House did not immediately respond to request for comment on Powell's plan to attend the hearing.

Powell underlines Fed independence as term winds down

Powell's planned attendance at Wednesday's hearing comes little more than a week after he issued a bombshell statement revealing that he is under criminal investigation by Trump's Department of Justice, calling the move an intimidation tactic to force lower interest rates.

The central banker said the probe related to his Senate testimony about cost overruns in the Fed's multiyear headquarters renovation, calling the allegations a "pretext" in the president's interest rate pressure campaign.

Powell vowed to carry out his duties "without political fear or favor" and to continue to set interest rates based on the Fed's dual mandate of price stability and maximum employment.

His remarks followed a prolonged campaign for lower interest rates from Trump, who sees ultralow mortgage rates as the keystone to improving housing affordability and has threatened to fire or sue Powell at various points over the past year.

The economist Krimmel says that Powell's presence at Cook's Supreme Court hearing may be intended to draw a parallel between her case and his own.

"Allegations of mortgage fraud in Cook's case and building cost overruns in Powell's are 'pretexts,' in the Chair's words," says Krimmel. "By standing with Cook at the Supreme Court, Powell  links the two sets of allegations and firms up his own case that the Administration is attempting to direct monetary policy by political pressure and intimidation."

The Fed uses higher interest rates to fight inflation, and lower rates to boost the labor market, in line with the central bank's dual mandate.

By law and tradition, rate decisions are supposed to be free from political influence, and history shows that keeping rates artificially low can wreak havoc in financial markets and the broader economy.

Powell's term as Fed chair will end in May, and Trump is expected announce his nominee to take over the role in the coming weeks.

However, some Republicans in the Senate have voiced alarm over the DOJ probe into Powell, potentially complicating the confirmation process if Trump's pick is not viewed as sufficiently independent.