The Fed’s New Math
Author: Greg Valliere
August 26, 2025
THE FEDERAL RESERVE is about to begin an all-out war with its critics.
THIS WILL be a unique war, relying on votes from regulatory agencies that will provide just enough votes to prevail in razor-thin margins.
THIS LATEST CASE is an attempted ouster of Fed Gov. Lisa Cook, who is accused — with modest evidence — of mortgage fraud. Democrats, led by Sen. Elizabeth Warren, described the move as an effort to control interest rates and bank regulation.
TRUMP SAID HE WOULD SEEK Cook’s ouster immediately; another dovish appointment is likely.
COMBINED WITH OTHER FED PERSONNEL moves, pro-Trump governors may have just enough votes to prevail with rate cuts — after furious hearings this fall.
COOK responded by saying she would not resign, arguing that there was no cause for her ouster. She has been a governor since 2022 and has not been charged with a crime — just holding two mortgages, a relatively small infraction compared to the insider trading that two Fed governors allegedly engaged in during the previous decade.
THIS COULD BE THE START OF A TREND, as regulatory nominees are blocked because of relatively minor infractions like having two mortgages,
AT THE LEAST, this could have a significant impact on interest rates, which may be headed lower as the Trump Administration moves on to the next front — lower interest rates.
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