Trump's Autocratic Power Is At Stake In Supreme Court Case Over Federal Reserve Firing

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On Wednesday, the Supreme Court gears up to hear arguments in a crucial case over the independence of the Federal Reserve, Trump v. Cook. But it won’t even be the first make-or-break moment the country’s main economic institution has had in the past few weeks.

President Donald Trump’s effort to seize control of the Federal Reserve and its power to set interest rates escalated last Sunday when Fed Chair Jerome Powell announced that he had been served “grand jury subpoenas” and threatened with “criminal indictment” related to cost overruns for the central bank’s building restoration project.

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Powell immediately pushed back. The DOJ’s claim that he had lied in congressional testimony about the project was a mere “pretext” that needed to be seen “in the broader context of the administration’s threats and ongoing pressure,” Powell said.

“The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President,” Powell said.

That is, to a significant extent, what is also behind Trump v. Cook, which is ostensibly about Trump’s right to fire Federal Reserve Board Governor Lisa Cook.

Trump, seeking desperately to fulfill his campaign promise to lower inflation, has for months been urging the Federal Reserve to radically cut interest rates. But the organization has refused, instead lowering rates at a more measured pace. Since Federal Reserve governors are protected from removal for anything other than misconduct, Trump had no direct way to either pressure them into doing so or replace them with more pliable officials. So the Department of Justice obtained an indictment against Cook on cooked-up mortgage-fraud charges, giving the president an excuse to fire her.

Cook sued, claiming that the allegations against her did not meet any standard that enabled for-cause removal and, even if they did, she was denied due process to challenge the charges against her before her removal. Two lower courts sided with Cook, but Trump appealed to the Supreme Court.

The stakes are huge. At issue is whether Trump can concoct criminal charges against Federal Reserve officials in order to seize control of the central bank, one of the most powerful institutions in the world.

“A Trump takeover will mean that the Fed can set interest rates to please a president who wants to juice the economy ahead of the midterm election — no matter what happens to inflation,” said Sen. Elizabeth Warren (D-Mass.), who is on the Senate committees for banking and finance.

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Trump’s control of the Federal Reserve could also “turbocharge” bank deregulation and lead to more “taxpayer bailouts and devastating financial crashes,” Warren said. But that’s not all.

“Once Trump controls a majority of the Fed, he can use the Fed’s vast powers to enrich himself personally, to reward his billionaire friends and to punish his enemies,” Warren said. “That has been his strategy across the government.”

A Supreme Court ruling in Trump’s favor would, therefore, further legitimize his authoritarian politicization of the executive branch’s prosecutorial power — while handing Trump even more autocratic power to repress.

That power to repress would come through the White House having control of the Federal Reserve’s vast powers to lend money, buy assets, approve bank mergers and de-bank institutions. This could serve as a way to spend money on the administration’s priorities without Congress, which nominally has the power of the purse, playing any role at all.

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“The monetary of levers can be abused to lend money, to buy assets to further the administration’s priorities and allow the administration to evade checks by the legislature that is supposed to, under our constitutional system, have the power of the purse,” said Lev Menand, a law professor at Columbia Law School and former Treasury Department advisor.

Rohit Chopra, the former head of the Consumer Financial Protection Bureau, detailed examples of how Trump could abuse this authority.

“What if a bank doesn’t lend to a key ally of the White House?” Chopra said. “Will they face losing access to the Fed’s primary credit programs? Or what if they don’t cooperate with a key item on the president’s agenda? Do they have to worry about getting de-banked?”

Such concerns aren’t far-fetched. They are what’s at the heart of Cook’s case before the Supreme Court.

The Trump administration argues that the charges against Cook, no matter how trivial, true or whether they are related to her work at the Federal Reserve or not, qualify as cause for her removal. The administration also argues that there is no process to challenge a for-cause removal and courts can’t question the president’s decision to remove an official for-cause.

It’s clear that if these arguments are accepted, Trump would be authorized in his attempt to seize control of the Federal Reserve by weaponizing the Justice Department even if he doesn’t have support to end the central bank’s independence.

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The Federal Reserve maintains its independence through for-cause removal protections for its board of governors. Those same for-cause removal protections for other independent agency heads are under threat before the Supreme Court in the case of Slaughter v. Trump, on which the justices have not yet ruled.

In that case, the court’s six conservative justices are certain to affirm the unitary executive theory and hand Trump near-total control of the executive branch by ruling that for-cause removal protections for independent agency officials are unconstitutional.

At the same time, the conservative justices appear loath to extend such a ruling to the Federal Reserve. Instead, as they telegraphed in a 2025 shadow docket ruling in Trump v. Wilcox, they are likely to construct an ahistorical carve-out to protect the Federal Reserve for policy reasons. That carve-out not only makes no sense, as the central bank board’s structure is no different than the Federal Trade Commission, the agency at issue in Slaughter, but it also highlights the overall problem with the unitary executive theory that the justices are embracing.

“If the justices are paying any attention, they should see that this president is an example of what is so dangerous with a system of government that allows the president to invoke inherent authority to overrule duly enacted legislation,” Menand said.

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In mimicking the tactics of modern-day autocrats in countries like Hungary, Turkey, Venezuela and Russia, Trump has abused the power of the Justice Department by cooking up bogus charges against his political enemies, including mortgage fraud against Cook and New York Attorney General Letitia James, perjury against former FBI Director James Comey, as well as investigations into California Democratic Sen. Adam Schiff and Rep. Eric Swalwell.

But using the criminal justice system to seize control of the central bank by targeting Powell and Cook with investigation or prosecution goes a step beyond the actions of most of the world’s modern autocrats.

“It’s an autocratic move, but it’s a little bit on the extreme edge to attack somebody who’s a technocrat by going after them internally instead of waiting for him to leave and replace him,” said David Driesen, a constitutional law professor at Syracuse University who studies the rise of modern autocracies. “It’s what dictators do, but kind of extreme for what dictators do.”

In countries like Turkey, Hungary and Venezuela, autocratic leaders did not need to resort to such machinations to seize control of their central banks. They gained the power to remove the heads of agencies with some semblance of independence, including central banks, after the legislature or the public enacted constitutional or legal changes.

Following constitutional amendments passed in 2017, Turkish President Recep Erdogan began removing central bank governors who would not adopt his heterodox economic views. Venezuela’s Hugo Chavez seized control of his country’s central bank in 2007. Sky-high inflation followed in both cases as the leaders juiced the economy for their immediate political benefit.

“We have never seen this in the United States,” said Cristina Bodea, a political science professor at Michigan State University who studies monetary policy.

Previous presidents have tangled with the Federal Reserve, but never with such a determined purpose to unseat its members. 

The most infamous example is likely President Richard Nixon’s strong-arming of Chair Arthur Burns into lowering interest rates ahead of Nixon’s 1972 reelection campaign. The result then, as it has been in nearly every country where an autocrat seized control of the central bank, was higher inflation.

Like with Nixon and Burns, Trump wants the Federal Reserve to dramatically lower interest rates to improve economic conditions and, therefore, Republicans’ electoral position in the 2026 midterms. But the way Trump is going about this “doesn’t make sense,” Bodea said. Instead, she argues, Trump could achieve smaller reductions in interest rates with a lighter touch than threatening or bringing prosecutions. 

“The only way this makes sense is as part of a broader erosion of the rule of law,” Bodea said. “Even autocrats, they have to deliver somehow or they have to repress more significantly.”

But it may be Trump’s repression that undoes his pursuit of more repression. The targeting of Powell provides the court with context that reveals the political nature of the investigation and the indictment of Cook, according to Menand.

“To have the president out there trying to potentially move a criminal investigation against the board chair, and proceed against other members of the board, it all tends to suggest that the goal here is to take over the Fed rather than to figure out whether Lisa Cook committed a removable offense here.”

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