Top economists across parties unite to defend Fed governor from presidential removal

A bipartisan coalition of former Federal Reserve chairs, Treasury secretaries, and top White House economists has urged the Supreme Court to reject President Donald Trump’s unprecedented attempt to remove Federal Reserve Governor Lisa Cook.

In a filing submitted Thursday, the former officials argued that allowing Cook’s removal would undermine the Fed’s longstanding independence from day-to-day politics, potentially leading to higher inflation and weakening the broader economy. The filing underscores the extraordinary nature of Trump’s effort and the far-reaching economic consequences if it were to succeed.

“There is broad consensus among economists, based on decades of macroeconomic research, that a more independent central bank leads to lower and more stable inflation without triggering higher unemployment,” the brief, signed by 18 leading economists from both political parties, stated. “Independent central banks also foster confidence in the stability of the U.S. dollar, enabling the country, businesses, and households to borrow at lower interest rates.”

Among the signatories were former Fed chairs Janet Yellen, Ben Bernanke, and Alan Greenspan, as well as former Treasury Secretaries Henry Paulson, Lawrence Summers, Robert Rubin, Timothy Geithner, and Jacob Lew. Paulson served under George W. Bush, Rubin and Summers served under Bill Clinton, and Geithner and Lew served in President Barack Obama’s administration.

Trump sought to fire Cook last month after members of his administration accused her of mortgage fraud. If successful, it would mark the first time in the Federal Reserve’s 112-year history that a president has attempted to remove a sitting governor. Cook has denied the allegations, and some documents have emerged that appear to undermine the fraud claims.

Cook filed a lawsuit to retain her position, and two federal courts have since ruled that she may remain in her role while the case is pending. Unlike cabinet secretaries, Federal Reserve governors do not serve at the president’s pleasure; they can only be removed “for cause,” traditionally defined as malfeasance or neglect of duty.

The legal question centers on whether the mortgage fraud allegations constitute sufficient cause for her dismissal. As a governor, Cook votes on the Fed’s interest-rate policies and oversees critical banking regulations.

Bernanke and other former officials stressed in their filing that public perception of Fed independence is vital. If businesses and workers, the so-called “price-setters” , believe the Fed is committed to maintaining its 2 percent inflation target, it can more effectively control inflation.

“If the Federal Reserve announces its commitment to low inflation and price-setters believe that commitment is genuine, they will set lower prices and wages consistent with that belief,” the filing noted. The Fed typically combats inflation by raising short-term interest rates to slow borrowing and spending.

However, if political pressure compels the Fed to prioritize short-term economic boosts by lowering interest rates, “price-setters will not trust future Fed commitments to low inflation, altering their economic decisions and creating a cycle of higher inflation and weaker employment outcomes,” the brief warned.

“Central bank independence is the mechanism by which Congress and the President effectively tie their hands like Ulysses resisting the sirens to safeguard against mismanaged monetary policy,” the filing added.

Additional signatories included former Republican Senator Phil Gramm of Texas; Jason Furman, former economic adviser to Obama; Glenn Hubbard and Gregory Mankiw, advisers to George W. Bush; Kenneth Rogoff, former IMF chief economist; and Cecilia Rouse, a top adviser to Joe Biden. The brief also drew support from John Cochrane, a noted Fed critic, and Jared Bernstein, a Biden economic adviser.

The Trump administration appealed to the Supreme Court after an appeals court upheld a lower court’s decision allowing Cook to remain in her position. Officials argue that the mortgage fraud allegations provide sufficient cause for her removal, citing her oversight of key financial regulations and the broader banking system.

As the Supreme Court prepares to consider the case, the legal and economic stakes remain high. Observers note that a ruling in favor of Trump could weaken the perceived independence of the Federal Reserve, potentially reshaping U.S. monetary policy and investor confidence for years to come.