As President Donald Trump mounts an unprecedented campaign to control the Federal Reserve, the U.S. Supreme Court on Wednesday is considering the scope of a major check on his ability to remove a member of the Fed for any reason.

The landmark case pits Trump against Fed governor Lisa Cook, a Democratic-appointee, whom the president attempted to fire for cause in August, he said, after members of his administration raised unproven allegations of mortgage fraud prior to her taking office. She denies the claims.

At the heart of the dispute is what constitutes “cause,” which is not defined in the Federal Reserve Act, and whether the president owes Cook formal notice and opportunity to defend herself in a hearing prior to removal. She has not been charged with a crime.

“The Court has to tell us what a firable offense looks like for members of the Federal Reserve Board,” said Lev Menand, an economics law scholar at Columbia Law School and former Treasury Department official. “But it can’t be just whatever the president says it is.”

Trump claims there is “sufficient evidence” that Cook illegally filed a mortgage application for a second home as a “primary” residence in an effort to secure more favorable loan terms, at the very least creating an impression of impropriety. The Justice Department has opened a criminal investigation.

“At a minimum, the conduct at issue exhibits the sort of gross negligence in financial transactions that calls into question your competence and trustworthiness as a financial regulator,” the president wrote in his letter firing Cook.

Cook, who refused to resign, insists through her attorneys that what she calls “baseless” allegations — relying on “one stray reference” in a 2021 mortgage document — are pretext for a politically-motivated effort to manipulate the Fed’s policy board.

“There is no fraud, no intent to deceive, nothing whatsoever criminal or remotely a basis to allege mortgage fraud,” Cook attorney Abbe Lowell wrote in a November letter to the DOJ.

Legal historians say the case is one of the most significant tests of presidential power in more than 100 years. In the balance is the independence of the nation’s central bank, which was designed to make decisions affecting the global economy and U.S. consumers with an eye on long-term interests of the country rather than short-term political agendas.

“This is a case that’s about much more than Cook,” Menand said. “It’s about whether President Trump will be able to take over the Federal Reserve Board in the coming months, and the administration has been pretty clear about that.”

Former top leaders of the Fed and many leading economists have warned that if the president succeeds in firing Cook in this manner, it would erode public confidence in the Fed, undermine the effectiveness of its policies, and unsettle financial markets.

Trump has made clear he wants the Fed to more quickly lower interest rates and has sharply criticized Fed Chairman Jerome Powell, a Trump appointee, for failing to lead the way. Earlier this month, the Justice Department opened a criminal investigation into Powell over his management of renovations of the Federal Reserve headquarters, which he called blatant political pressure.

“Making sure that the Fed has the ability to access credible data, to be able to use expertise to analyze that data in a way that is best in class, and having the time to be able to affect policy that may take a time over months or even quarters or years — this is all imperative for having that economy that moves towards full employment and price stability,” said Heather Boushey, a research economist at Harvard University and a former White House economic adviser to President Joe Biden.

A majority of current Fed Board members have acted cautiously on interest rates over long-term inflation concerns. If Trump were able to replace Cook, he would potentially be able to bend the consensus view of the board to his will, though some Senate Republicans have vowed a critical vetting of any future nominee.

No president has ever attempted to remove a member of the Federal Reserve. Cook remains on the job for the time being after the Supreme Court in October postponed a decision on Trump’s request for an immediate ruling allowing him to remove her pending litigation.

Cook was appointed to a 14-year term in 2022 by President Biden and is the first Black woman ever to serve on the central bank’s advisory committee.

THE LEGAL ARGUMENTS

During oral arguments at the court on Wednesday, Trump Solicitor General John Sauer is expected to argue that courts have no authority to second-guess the president’s judgment on what constitutes “cause” for a Fed governor’s removal, a power clearly authorized under federal law.

“Cook’s apparent (and undisputed) financial misconduct,” Sauer wrote in the government’s court brief, “created an intolerable appearance of impropriety in someone charged with the weightiest responsibilities in our financial system.”

“The ordinary meaning of ’cause,'” he told the court, “does not require a crime, much less a conviction.”

But Cook’s attorneys, including Paul Clement, a prominent conservative lawyer and former solicitor general under President George W. Bush, will argue that the law does not give a president the ability to remove a Fed governor simply on the basis of an allegation.

“Presidents will readily be able to allege (even if they cannot prove) minor potential improprieties committed prior to service by any governor whose policy decisions they dislike,” they warned the justices in their brief. “Congress did not mean for the nation’s monetary policy to turn on that game of find-an-alleged-crime.”

Cook also insists she has a constitutional right to due process, which she says she was not afforded before or after Trump announced her removal in a post on Truth Social.

WHAT IS KNOWN ABOUT THE ALLEGATIONS

The allegations of “gross negligence” that Trump has lodged against Cook center on two mortgages she holds for personal residences in Michigan and Georgia.

Cook was raised in Milledgeville, Georgia, and studied economics in Michigan, where she also later taught as a professor.

A mortgage filed in Washtenaw County, Michigan, on June 18, 2021, shows a $203,000 home loan secured by Lisa D. Cook. Fulton County, Georgia, public records show Lisa D. Cook also holds a $540,000 home loan registered on July 2, 2021 from the BankFund Credit Union. Both were recorded using the Uniform Home Loan Application. Trump and other administration officials claim she misrepresented her residency status on applications for those home loans, improperly claiming both as her “primary residence.”

Cook, through her attorney, has acknowledged one application incorrectly indicated “primary” residence but insists it was a harmless mistake, no advantage was gained, and that it was contradicted by related documents which correctly identified the property.

“At the core of the referrals and allegations of wrongdoing is a fundamental misconception and purposeful omission,” Cook’s attorneys wrote in a letter to Attorney General Pam Bondi. Providing false or inaccurate information on a mortgage application can be considered fraud, as banks rely on that data to determine risk and set financing rates for borrowers. Mortgages for primary residences typically receive lower rates than for second homes or rental properties.

But showing criminal intent is key to a successful fraud claim, legal analysts say. No criminal charges have been brought by federal authorities. None of the financial institutions providing Cook’s home loans have raised claims of possible fraud.

WHAT COURTS HAVE SAID

In a 2-1 decision in September, the U.S. Court of Appeals for the District of Columbia affirmed a lower court ruling that Cook was unlawfully terminated from her position.

Appellate Judges Brad Garcia and J. Michelle Child — both Biden appointees — agreed that Cook’s due process rights were violated when Trump fired her without allowing her any opportunity to challenge the decision. They added that lifting the lower court’s order — allowing the immediate removal of Cook — could have a “disruptive effect” on the Federal Reserve.

In his dissent, Judge Gregory Katsas, a Trump appointee, argued that Trump’s attempt to remove Cook for cause was lawful and that her due process rights were not violated. Katsas said that Trump should have the power to remove Cook if her continued service “would enable a potentially compromised Governor to engage in significant governmental action — such as voting on whether to adjust interest rates.”

While the Supreme Court has endorsed broad presidential power to remove members of independent agencies that exercise executive power — like the Federal Trade Commission, Merit Systems Protection Board, National Labor Relations Board, and Consumer Product Safety Commission — the conservative majority of justices has also made clear that the Fed is different.”

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, the court wrote in an unsigned May opinion that allowed Trump to terminate Democratically-appointed members of the MSPB and NLRB.

What that may mean for the Cook case remains unclear.

“If the court embraces any of the president’s arguments here,” said Menand, “I think we very rapidly end up in a situation where President Trump takes control of the board and the board more or less comes under the thumb of the White House. That obviously has implications for monetary policy.”

A decision in the case is expected by the end of June.