Lisa Cook, Federal Reserve Board member has filed suit. This all follows a major announcement by none other than President Donald Trump that he was getting rid of her. This surprising development comes on the heels of Trump’s very public legal attack on Cook, accusing her of committing mortgage fraud. She has never been charged with doing anything wrong.
On Monday, Trump raised the stakes in the legal war when he said he would remove Cook from office. Cook, who has served on the Fed board since 2021, previously served as Indiana’s state economist. Trump had explicitly identified removing Cook as one of the means by which he would ensure a majority of appointees of his on the Federal Reserve Board. This would provide him much more latitude to pursue his monetary policy agenda.
Cook’s lawsuit asserts that her removal was illegal and seeks her reinstatement. She maintains that Trump’s stated reasons for her removal are baseless and politically motivated. She’s consistently denied her wrongdoing on the mortgage fraud allegations.
Trump’s remarks reflect a broader strategy to reshape the Federal Reserve’s composition. He also signaled that getting a majority of his own appointees would be necessary to make any meaningful changes on housing policy.
“Once we have a majority, housing is going to swing and it’s going to be great. People are paying too high an interest rate… We have to get the rates down a little bit.” – Donald Trump
The statement goes on to list lowering mortgage rates as a pillar of Trump’s economic agenda. He believes that a shift in leadership at the Federal Reserve will help address what he perceives as excessively high interest rates that burden home buyers.
Here’s what housing economist Lisa Sturtevant had to say about what’s happening in today’s market. To illustrate this, she noted how home buyers have a lot more negotiating power. This trend, in part, has resulted from increased inventory giving them more access to score quality deals compared to past years.
“If you are a home buyer who is ready to get into the market, and you can afford to buy a home in this market, you can take advantage of more inventory and of more negotiating power than you could have a year ago,” – Lisa Sturtevant
Sturtevant went on to say that $1,000 isn’t the magic number while mortgage rates are important, buyers should recognize current market conditions provide buyers with unprecedented advantages. She stressed the point that sellers are having to cut their prices, and that homes are sitting longer.
“Sellers are cutting prices, inventory is lingering, so the focus on mortgage rates might, in some ways, take away from other opportunities that buyers have in the market to make the bottom line work for them,” – Lisa Sturtevant
Trump vs. Cook case has huge implications for Fed governance. It further reflects deeper running tensions over the direction of economic policy and even the independence of regulatory bodies. Both parties are under no illusion that a months-long legal fight looms. This leaves open the question of what this should mean for monetary policy and housing markets.