What brokers need to know about the long-term effects of the president firing a Fed governor
As President Donald Trump signed the paperwork to appoint Stephen Miran to the open seat on the Federal Reserve’s Federal Open Market Committee (FOMC), he reassured those in attendance that the Fed needed to be independent.
However, one law professor believes that if the Supreme Court sides in favor of the administration in its efforts to remove Fed governor Lisa Cook for alleged mortgage fraud, it could signal an end to the independence of the central bank.
While an appeals court upheld a lower court’s ruling that Cook could remain on the Fed board for now, the administration is expected to appeal the case to the Supreme Court.
Kenneth Katkin (pictured top), law professor at Northern Kentucky University’s Chase College of Law, believes that the highest court in the land will decide Fed independence.
“When you talk about the Fed independence, that's really what the Supreme Court will be deciding,” Katkin told Mortgage Professional America. “Whether we still have the principle of Fed independence or not. I think as long as the lower courts are deciding it, the laws that exist are crafted the way they are to preserve Fed independence.”
Changing existing law
When it comes down to Fed independence, the matter at hand is whether the central bank is free from direct interference from the president, regardless of which party is in the White House.
“If you want an independent Fed, then you want the Fed governors to have certain kinds of legal protections against pressure from the president,” Katkin said. “That's been the understanding for as long as we've had the Fed, but Trump is fundamentally challenging that. If the Supreme Court rules in favor of Trump, then they will be saying that the concept of Fed independence is over, that we won't have that anymore.”
Mortgage broker Carlos Scarpero of Edge Home Finance says loan officers or underwriters should’ve caught Gov. Cook’s two “primary” residences—1,000 miles apart—and warns of a rising DSCR‐based occupancy fraud trend pushed by social media influencers.https://t.co/mpkic3e0OE
— Mortgage Professional America Magazine (@MPAMagazineUS) September 10, 2025
One thing that makes the Supreme Court ruling different than the lower courts is that the Supreme Court can change existing law. Katkin also noted that the current court has ruled in Trump’s favor on several cases already.
“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.
“Article Two just says the executive power of the United States shall be vested in the President of the United States,” Katkin said. “So one person gets all the executive power of the government, and then Article Two doesn't actually tell us if there's going to be any other people in the executive branch. We have a Justice Department, a State Department, a Defense Department, and a Federal Reserve Bank. But none of that is created in the Constitution.
“The Constitution just leaves it to Congress to create or eliminate all those departments of the executive branch. From that structure, some legal theorists have argued that the President has to have complete control over everything that the executive branch does. That is a theory that this Supreme Court has some sympathy for because it's an idea that comes from conservative legal theory, and it's a conservative Supreme Court right now.”
One reason the Federal Reserve is separate from the executive branch is that every president, if able to impact monetary policy directly, would lower rates immediately upon taking office, Katkin said.
“We have an independent Fed because of the idea that our economy really depends on non-partisan professional management,” he said. “Just about every president would always prefer low interest rates. But if we have low interest rates all the time, that's going to be extremely inflationary.”
Stay updated with the freshest mortgage news. Get exclusive interviews, breaking news, and industry events in your inbox, and always be the first to know by subscribing to our FREE daily newsletter.
