Fed chief Powell calls Cook Supreme Court case most important in bank’s history

Federal Reserve Chair Jerome Powell on Wednesday explained his controversial decision to attend Fed Governor Lisa Cook’s Supreme Court hearing, saying the case could have a major effect on the central bank’s independence.

“That case is perhaps the most important legal case in the Fed’s 113-year history,” Powell said Wednesday during his post-Fed meeting press conference. “As I thought about it, I thought it might be hard to explain why I didn’t attend.”

Powell last week attended oral arguments in the case, which will determine if President Donald Trump can fire Cook, who had been accused of mortgage fraud, a claim she denies. Treasury Secretary Scott Bessent called Powell’s decision to attend a “mistake” in an interview with CNBC last week, saying the Fed chair was politicizing the case.

Powell also noted that former Fed Chair Paul Volcker “famously” went to a Supreme Court case in the 1980s, but did not specific which. That showed Powell there was precedent for his attendance, he said.

The Federal Reserve was created in 1913 under President Woodrow Wilson.

During the hearing, Supreme Court justices appeared skeptical of Trump’s claims that he was within his powers to attempt to remove Cook and raised concern about what such a precedent would mean for Fed independence.

Trump has cited mortgage fraud allegations in his move to axe Cook, but critics have said the action appears tied to his push for lower interest rates. The Supreme Court previously allowed Cook to remain in her role pending the oral arguments.

Powell’s attendance followed his revelation earlier this month that he’s facing a federal probe over the Fed’s headquarters renovations. Politicians and monetary policy watchers have connected the investigation to Trump’s repeated criticism of Powell for not moving interest rates lower at a faster pace.

The criminal investigation of Powell and attempted removal of Cook have together raised concerns that the Fed’s longstanding apolitical posture is at risk.

Powell said the Fed’s political separation is key to ensuring credibility long term during Wednesday’s press conference.

“The point of independence is not to protect policymakers or anything like that,” Powell said. “It just is that every advanced economy (and) democracy in the world has come around to this common practice.”

If you lose that separation, he said, “it would be hard to restore the credibility of the institution.”

Looming over Wednesday’s press conference was the knowledge that Trump could at any time announce a successor for Powell, who’s term as chair ends in May. Powell offered some advice timely advice for whoever takes the role next.

“Don’t get pulled into elected politics,” Powell said. “Don’t do it. “