“When it gets to the Supreme Court, all bets are off, because the Supreme Court can change existing law,” he said. “They were already signaling that they’re not sure they really like the 90-year-old Humphrey’s Executors case, and that they were already thinking about giving the President more removal authority over various government officials. I think there’s a good chance they’re going to affirm Trump.”
Why does it matter?
The question that brokers really want to know is why it would matter if the Supreme Court allows the administration to remove Cook. According to legal experts, it could pave the way for any president to remove Fed governors for any reason.
Politicizing the Federal Reserve can have an impact on markets. Sam Williamson, a senior economist with First American, told Mortgage Professional America that if the markets perceive decisions as being politically driven, it can have the opposite effect on mortgage rates.
“Rate decisions require consensus among the full Federal Open Market Committee, which acts as a guardrail against abrupt shifts,” Williamson said. “The greater risk lies in perception. If markets view aggressive cuts as politically motivated, rather than data-driven, inflation expectations could rise, pushing long-term yields—and mortgage rates—higher, despite lower short-term rates.”
The reason there is so much grey area with entities like the Federal Reserve is that it is among many federal agencies that were not established in the Constitution. Katkin said a theory called the unitary executive holds that the president should have complete control over all actions of the executive branch.
