Fed independence goes before the Supreme Court

Summary

Marketplace Morning Report — "Fed independence goes before the Supreme Court"

Date: January 20, 2026
Host: Nancy Marshall Genzer (in for David Brancaccio)
Key Segment Contributor: David Brancaccio
Main Interview Guest: Sarah Binder, Brookings Institution & George Washington University

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Episode Overview

This episode covers the latest economic and business news, focusing particularly on a landmark Supreme Court case that could redefine the independence of the Federal Reserve. The episode opens with cautious optimism about housing affordability, dives into news about market modernization and the upcoming Fed meeting, and culminates in an in-depth examination of whether a U.S. president can remove a Federal Reserve governor. The Supreme Court case involving President Trump's effort to dismiss Fed Governor Lisa Cook raises fundamental questions about the separation of politics from central banking.

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Key Discussion Points & Insights

Housing Affordability in 2026

[00:31–02:28]

• Pending Home Sales Data and Zillow Forecasts:

  • Awaited data on December home sales will clarify if homes are becoming more accessible.
  • According to Zillow, more metro areas might reach affordability by end of 2026.

• Expert Analysis:

  • Orfeh Divunguy (Zillow): “It's gonna be a year of small wins.” (01:10)
  • Three improving factors:
    • Income growth: Household incomes are up.
    • Falling mortgage rates: Lower than a year ago.
    • Stable prices: Home price growth has plateaued.

• Housing Cost Burden:

  • Buying now demands about a third of the median household's income.
  • Orfeh Divunguy: “Is high, but it's actually the best it's been since August 2022.” (01:34)

• Affordability Rule:

  • Spending >30% of income on housing is considered burdensome.
  • Eric Murray (UNC Chapel Hill): “If you start spending more than 30% of your income on housing costs, then it means you're giving up something else.” (02:00)

• Uncertainty Remains:

  • Fridgesica Louts (National Association of Realtors): “I think it's a very mixed picture… She’ll be watching those all-important mortgage interest rates, too.” (02:09)

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Market Modernization & Fed Watch

[02:28–03:15]

• NYSE 24/7 Digital Platform:

  • NYSE plans to enable round-the-clock trading through a separate digital exchange.

• Upcoming Federal Reserve Meeting:

  • The Personal Consumption Expenditures Index (PCE), the Fed’s preferred inflation gauge, will be released ahead of the Fed’s next interest rate meeting.

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Supreme Court: Presidential Power vs. Fed Independence

[04:16–07:43]

• Background:

  • The Supreme Court is set to hear arguments on whether President Trump can fire Fed Governor Lisa Cook over mortgage fraud allegations (Cook denies all wrongdoing and hasn’t been charged).
  • Fed Chair Jerome Powell will attend the hearing.

• Legal Foundation:

  • The Federal Reserve Act permits removal of governors “for cause” only.

• Key Interview — David Brancaccio with Sarah Binder (Brookings/George Washington University):

  What Does “For Cause” Mean?

  • David Brancaccio: “How do you understand that idea of firing for cause?” (04:48)
  • Sarah Binder:

    “When Congress writes that, its point is that the President has to have an actual, real, non-policy reason to dismiss an appointee… The President just doesn’t have carte blanche to say, ‘I don’t like you, I don’t like your policy decisions.’ That’s why Congress put that for-cause phrase into many of the laws that set up these agencies.” (05:03)

  Is This About the Allegations?

  • David Brancaccio: “[Allegations]…are not proven yet.” (05:34)
  • Sarah Binder:

    “It’s not about whether or not there was mortgage fraud here. The key question is can the President remove Governor Cook while her case, her legal case works its way through the federal courts.” (05:44)

  Broader Presidential Power: Is the Fed Different?

  • David Brancaccio: “Is it relevant that the court has…allowed President Trump to remove members of various other federal agencies?” (06:07)
  • Sarah Binder:

    “In fact, the Supreme Court has basically given carte blanche to President Trump to remove all these other officers… And… they say there’s something unique and different about the Federal Reserve. ... We might treat that action by the president differently.” (06:20)

  Stakes: Independence of Central Banking

  • David Brancaccio: “If the court were to side with the administration on this, …the Fed is closer to… the National Security Council, where those members serve at the pleasure of the president. …That idea will, I don't know, shake our central banking system.” (06:53)
  • Sarah Binder:

    “Absolutely. …It has potentially explosive implications for how the Fed governors make their decisions, but also, more importantly, what markets think about the Fed and their commitment to low inflation. And that’s why so many people are paying such attention.” (07:16)

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Notable Quotes & Memorable Moments

• “It’s gonna be a year of small wins.”
  — Orfeh Divunguy, Zillow (01:10)

• “If you start spending more than 30% of your income on housing costs, then it means you’re giving up something else.”
  — Eric Murray, UNC Chapel Hill (02:00)

• “When Congress writes that, its point is that the President has to have an actual, real, non-policy reason to dismiss an appointee… The President just doesn’t have carte blanche to say, ‘I don’t like you, I don’t like your policy decisions.’”
  — Sarah Binder (05:03)

• “It’s not about whether or not there was mortgage fraud here. The key question is can the President remove Governor Cook while her legal case works its way through the federal courts.”
  — Sarah Binder (05:44)

• “If the court were to side with the administration…then the Fed is closer to…the National Security Council, where those members serve at the pleasure of the president. …That idea will, I don't know, shake our central banking system.”
  — David Brancaccio (06:53)

• “It has potentially explosive implications for how the Fed governors make their decisions, but also…what markets think about the Fed and their commitment to low inflation.”
  — Sarah Binder (07:16)

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Timestamps of Important Segments

• 00:31: Housing affordability outlook for 2026
• 01:13: Factors affecting current housing prices
• 02:28: NYSE developing 24/7 digital trading platform; Fed's inflation index release
• 04:16: Supreme Court preview: presidential authority to fire Fed governor
• 04:48–07:43: David Brancaccio’s full interview with Sarah Binder on the implications of the Supreme Court case for Fed independence

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Episode Summary

This episode offers listeners a concise but comprehensive update on the U.S. economic landscape, with a special focus on the Supreme Court challenge that could transform the nature of central bank independence in America. Experts highlight nuanced progress in housing affordability (tempered by lingering challenges), highlight financial market modernization, and dissect high-stakes legal arguments around presidential power and the foundational principles underpinning federal institutions. The conversation around the Fed’s independence is particularly urgent, underscoring how legal details can have sweeping macroeconomic consequences.

Transcript

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[Nancy Marshall Genzer]

Maybe some good news for home buyers From Marketplace, I'm Nancy Marshall Genzer in for David Brancaccio. Will 2026 be the year that homes finally become more affordable? Tomorrow we get pending home sales for December. That'll tell us how many homes went under contract. And Zillow recently released a report with some potentially good news for prospective buyers. Their researchers say homes will become affordable in more metro areas by the end of this year. Marketplace's Carla Javier brings this look at affordability.

[Carla Javier]

To be clear, homes aren't suddenly becoming way more affordable for everyone, says Orfeh Divunguy at Zillow.

[Eric Murray]

It's gonna be a year of small wins, he says.

[Carla Javier]

There are three factors.

[Eric Murray]

Incomes have continued to increase. Mortgage rates have actually fallen relative to a year ago. And then the third factor is, of course, prices. Price growth has remained somewhat flat.

[Carla Javier]

He says that median income households buying today have to spend roughly a third of their income on mortgage payments, which.

[Eric Murray]

Is high, but it's actually the best it's been since August 2022.

[Carla Javier]

And Zillow forecasts that home buying in some areas could become even closer to affordable by the end of the year. Spending no more than 30% of income on home payments, including property taxes and insurance, is the affordability rule of thumb, says Eric Murray, BoJack at the University of North Carolina at Chapel Hill.

[Eric Murray]

If you start spending more than 30% of your income on housing costs, then it means you're giving up something else.

[Carla Javier]

Fridgesica louts at the national association of Realtors affordability this year, I think it's a very mixed picture, she says. She'll be watching those all important mortgage interest rates, too. And if more inventory comes onto the market and brings prices down, I'm Carla Javier for Marketplace.

[Nancy Marshall Genzer]

The New York Stock Exchange is working on a new platform for digital trading that would allow investors to trade around the clock. The platform would be separate from the NYSE's current exchange, which operates only on weekdays. Later this week, the Federal Reserve's preferred measure of inflation, the Personal Consumption Expenditures Index, or pce, for November is is due to be released. It comes as the Federal Reserve prepares to meet for its next meeting on interest rates next week.

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[Nancy Marshall Genzer]

Will hear arguments tomorrow in the case around President Trump's bid to fire Federal Reserve governor Lis over mortgage fraud allegations. Cook denies any wrongdoing. She hasn't been charged with any crime. Federal Reserve Chair Jerome Powell is set to attend tomorrow's session. The question is, can a president remove a sitting Fed governor? For more, my colleague David Brancaccio spoke with Sarah Binder, senior fellow at the Brookings Institution and a professor of political science at George Washington University. Here's that conversation.

[David Brancaccio]

The Federal Reserve act says that presidents can only remove governors for cause. Now I know HR people around the country deal with for cause all the time. How do you understand that idea of firing for cause?

[Sarah Binder]

Well, when Congress writes that its point is that the President has to have an actual real non policy reason to dismiss an appointee, right? Negligence, inefficiency in office. Those phrases go. The President just doesn't have carte blanche to say I don't like you, I don't like your policy decisions. That's why Congress put that four cause phrase into many of the laws that set up these agencies.

[David Brancaccio]

I mean, regardless of what one's view is on the seriousness of the allegations against Lisa Cook, it is fact that they're not proven yet.

[Sarah Binder]

Correct. And I think it's important to keep in mind this isn't a case on the merits. It's not about whether or not there was mortgage fraud here. The key question is can the President remove Governor Cook while her case, her legal case works its way through the federal courts.

[David Brancaccio]

I mean, is it relevant that the court has, in previous case, allowed President Trump to remove members of various other federal agencies, that he does have latitude when we're not talking about the Fed, for sure.

[Sarah Binder]

And in fact, the Supreme Court has basically given carte blanche to President Trump to remove all these other officers that he has fired from various agencies. And in these other cases, the court has kind of left these little breadcrumbs. You know, they say there's something unique and different about the Federal Reserve. And they've sort of suggested we might treat the effort to remove a governor from the board of governors of the Fed. We might treat that action by the president differently.

[David Brancaccio]

I mean, if those breadcrumbs have led us astray here and the court were to side with the administration on this, I guess we live in a world where the Fed is closer to, I don't know, the National Security Council, where those members serve at the pleasure of the president. I mean, that idea will, I don't know, shake our central banking system.

[Sarah Binder]

Absolutely. And even though it's a narrow legal question, it has potentially explosive implications for how the Fed governors make their decisions, but also, more importantly, what markets think about the Fed and their commitment to low inflation. And that's why so many people are paying such attention.

[David Brancaccio]

Sarah Bender is at Brookings and George Washington University. Thank you so much.

[Sarah Binder]

Thanks for having me.

[Nancy Marshall Genzer]

Our producers are Emma Condon, Tamar Fagan, Ashley Rodriguez, Ariana Rosas and Erika Soderstrom. Our senior producer is Alex Schroeder. Our supervising senior producer is Meredith Garretson Morby. I'm Nancy Marshall Genzer with the Marketplace Morning Report. From APM American Public Media.

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