A hearing is scheduled at 10 a.m. ET in a federal court in Washington, D.C., regarding Lisa Cook’s dismissal from the Federal Reserve. The outcome of this legal case will influence more than just Cook’s role at the central bank.

At stake is the independence of the Federal Reserve, the world’s most important central bank.

JPMorgan’s chief U.S. economist Michael Feroli pointed out that Cook’s potential removal from the Fed “would create the second vacancy on the board in less than a month, allowing the president to adapt the board to his preferences.”

“If the president were successful, the outcome would be momentous,” Feroli added.

While gaining a majority on the Fed’s board doesn’t provide Trump’s nominees the direct authority to alter interest rates, his nominees might, starting in February, choose not to renew or confirm a new four-year term for regional Fed bank presidents who participate in interest rate decisions.

These presidents are integral to the 12-member Federal Open Market Committee, which includes the Fed chair, six Fed governors, and five regional Fed presidents from locations such as New York, San Francisco, Chicago, and Atlanta.

By withholding confirmation of certain regional presidents, the Trump-nominated board members could significantly impact the functioning of the Fed’s rate-setting committee.

Currently, two of Trump’s nominees are on the Fed’s board. Records obtained by Bloomberg News reveal that Michelle Bowman and Christopher Waller abstained from voting in 2023 to approve Chicago Fed President Austan Goolsbee, a previous key economic adviser to President Barack Obama, for the rate-setting FOMC.

Friday’s court argument will center around allegations made by Trump’s Federal Housing Finance Authority Director Bill Pulte. He has claimed that Cook committed mortgage fraud before she became a Fed governor.

For Cook, her lawyers are seeking an immediate and “emergency temporary restraining order” that would confirm her ability to continue in her role while the merits of her case are heard.

Cook’s broader lawsuit against the administration seeks a “declaration that President Trump’s August 25, 2025 purported firing … is unlawful and void and that Governor Cook remains an active member of the Board of Governors of the Federal Reserve.” She also seeks a declaration from the court that “that an unsubstantiated allegation of mortgage fraud prior to a Governor’s confirmation is not cause for removal.”

Under the legislation that created the Federal Reserve, the only reason a governor can be removed from their role is “for cause,” which is generally seen as some kind of wrongdoing. Trump’s termination letter to Cook said that the administration believes she “may have made false statements on one or more mortgage applications.”

Cook’s lawyers have emphasized the use of “may” in Trump’s letter, saying the claims from Pulte are unsubstantiated.