Labor & Employment Law Daily Wrap Up, WHITE HOUSE NEWS—President now gunning for another high-profile board member, (Aug 26, 2025)

By Brandi O. Brown, J.D.

The President has announced plans to remove Dr. Lisa D. Cook from her position on the Federal Reserve’s Board of Governors.

In a letter shared yesterday on social media, President Donald Trump contends that, pursuant to Article II of the Constitution and the Federal Reserve Act of 1913, he is removing Dr. Lisa D. Cook from her position as a member of the Board of Governors of the Federal Reserve, “effective immediately.”

In the letter, Trump claims that the Act allows him to remove Cook, at his “discretion, for cause” and that he has “determined that there is sufficient cause” to remove her based on a criminal referral providing “reason to believe” she “may have made false statements on one or more mortgage agreements.” He accuses her of “deceitful and potentially criminal conduct,” also claiming that “[a]t a minimum, the conduct at issue exhibits the sort of gross negligence in financial transactions that calls into question [her] competence and trustworthiness as a financial regulator.” The conduct in question relates to documents allegedly signed by Cook, two weeks apart, as part of mortgage paperwork.

Trump v. Wilcox. His allegations appear to be an attempt to test the stated roadblock to any actions against members of the Federal Reserve Board that potentially was created by language used by the Supreme Court majority in Trump v. Wilcox.

In that case, the U.S. Supreme Court stayed preliminary injunctions against Trump’s removal of NLRB member Gwynne Wilcox and MSPB member Cathy Harris, both of which were without cause and in violation of their respective agencies’ organic statutes. The Court said the decision “reflects our judgment that the Government is likely to show that both the NLRB and MSPB exercise considerable executive power,” and “that the Government faces greater risk of harm from an order allowing a removed officer to continue exercising the executive power than a wrongfully removed officer faces from being unable to perform her statutory duty.” Justice Kagan, joined by Justices Sotomayor and Jackson, dissented (Trump v. Wilcox, No. 24A966 (U.S. May 22, 2025)).

Majority indicated different result for the Fed. In Wilcox, the majority specifically addressed removal of members of the Federal Reserve’s Board of Governors: “Finally, respondents Gwynne Wilcox and Cathy Harris contend that arguments in this case necessarily implicate the constitutionality of for-cause removal protections for members of the Federal Reserve’s Board of Governors or other members of the Federal Open Market Committee.... We disagree. The Federal Reserve is a uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States. See Seila Law, 591 U. S., at 222, n. 8.”

Justice Kagan’s dissent. Justice Kagan, in a separately written dissent, discussed this attempt to carve out the Federal Reserve Board. “The majority closes today’s order by stating, out of the blue, that it has no bearing on “the constitutionality of for-cause removal protections” for members of the Federal Reserve Board....”

However, Kagan presciently added:

“I am glad to hear it, and do not doubt the majority’s intention to avoid imperiling the Fed. But then, today’s order poses a puzzle. For the Federal Reserve’s independence rests on the same constitutional and analytic foundations as that of the NLRB, MSPB, FTC, FCC, and so on—which is to say it rests largely on Humphrey’s. So the majority has to offer a different story: The Federal Reserve, it submits, is a “uniquely structured” entity with a ‘distinct historical tradition’—and it cites for that proposition footnote 8 of this Court’s opinion in Seila Law. Ante, at 2 (citing 591 U. S., at 222, n. 8).

But—sorry—footnote 8 provides no support. Its only relevant sentence rejects an argument made in the dissenting opinion ‘even assuming [that] financial institutions like the Second Bank and Federal Reserve can claim a special historical status.’ And so an assumption made to humor a dissent gets turned into some kind of holding. Because one way of making new law on the emergency docket (the deprecation of Humphrey’s) turns out to require yet another (the creation of a bespoke Federal Reserve exception). If the idea is to reassure the markets, a simpler—and more judicial—approach would have been to deny the President’s application for a stay on the continued authority of Humphrey’s.”

Cook responds. "President Trump purported to fire me 'for cause' when no cause exists under the law, and he has no authority to do so," Cook has responded. "I will not resign."

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