Fed chair candidate sees ‘plenty of room’ to cut rates in 2026 

The leading candidate to replace Federal Reserve Chair Jerome Powell has indicated support for more short-term interest rate cuts and widespread change at the central bank in 2026.

Elsewhere in Washington, D.C., the White House disputed a report that suggested the president may have committed mortgage fraud in the '90s, and a top Consumer Financial Protection Bureau (CFPB) official has resigned.

In Congress, the bipartisan ROAD to Housing Act was derailed after picking up steam in recent months, and trade groups are urging legislators to grant long-term approval for a key insurance program.

Fed chair candidate criticizes central bank's politicization

National Economic Council Director Kevin Hassett has emerged as President Donald Trump's rumored favorite to become Fed chair once Jerome Powell's term ends in May — and he's been making the media rounds to share his opinions on the Federal Reserve.

"There are a lot of things that look political in recent behavior of the Fed, and I think that's unacceptable," he said during a conversation this week at the Wall Street Journal Leadership Institute. "The Fed cannot be a political body."

While speaking with Fox Business on Dec. 9, Hassett cited Fed officials' repeated concerns about the economic impacts of Trump's tariffs as an example of apparent political behavior.

Many economists sounded the alarm about the politicization of the Fed — and its future as an independent body — as the Trump administration pressured Powell and other Fed officials to lower borrowing costs. 

That has led some to wonder if a Trump appointee can operate independently of the White House. Hassett vowed to lead with his "judgment, which I think the president trusts, and the firm commitment to not be partisan," he told the Wall Street Journal.

And that judgment appears to differ from the Fed's current stance. Hassett said there is still "plenty of room" for short-term interest rate cuts in 2026, but after making a 25-basis-point cut on Dec. 10, a divided Fed indicated that it's ready to start holding back.

White House denies Trump committed mortgage fraud

Months after the president and officials within his administration began accusing high-profile Democrats of mortgage fraud, a ProPublica report has suggested that Trump may have been involved in similar activities in the 1990s.

The Dec. 8 report assessed mortgage documents for two properties in Palm Beach, Florida, both of which were reportedly rented out despite being listed as a primary residence in 1993.

A White House official told ProPublica that the mortgages were from the same lender, and it was thus "illogical to believe" that the lender "would agree to defraud itself."

The official described the report as "yet another desperate attempt by the Left wing media to disparage President Trump with false allegations" and added that Trump "has never, or will ever, break the law."

CFPB enforcement official resigns

Michael Salemi, the principal deputy enforcement director at the CFPB, announced his resignation in an email obtained by Bloomberg Law last week.

Salemi, who will leave his post at the bureau at the end of this week, wrote that it has "become clear" to him that "if things proceed as planned, there is no path to an effective future enforcement program at the Bureau."

Salemi's resignation comes amid the Trump administration's efforts to halt investigative activities at the agency, which Office of Management and Budget Director Russell Vought has said is in the process of shutting down.

Housing affordability bill loses momentum

The Renewing Opportunity in the American Dream (ROAD) to Housing Act, a bipartisan package aimed at addressing housing affordability, has been sidelined. While the bill was attached to a version of the annual National Defense Authorization Act (NDAA) that passed in the Senate, it has been removed in the House of Representatives' most recent NDAA draft.

In a statement addressing the change, House Committee on Financial Services Chairman French Hill said legislators will soon pursue other strategies to tackle housing costs.

"Next year, we look forward to working with our Senate colleagues to send a bill to the president's desk that reflects the views of both chambers and leads to more affordable choices for America's homeowners and renters," Hill said.

Senators on both sides of the aisle expressed frustration at the bill's removal, with Republican Tim Scott of South Carolina declaring that it "deserves to cross the finish line" and Democrat Elizabeth Warren of Massachusetts warning that members of her party "will pass it ourselves when we take back Congress."

Long-term NFIP approval needed, trade groups say

Fourteen organizations with ties to real estate, insurance and lending have called upon Congress to secure long-term authorization of the NFIP, the nation's largest flood insurance provider.

NFIP authorization lapsed during the federal government shutdown this fall, and the latest extension approved by Congress only lasts until Jan. 30, 2026.

Every lapse "is highly disruptive to the mortgage and commercial lending processes," noted a Dec. 2 letter addressed to congressional leaders. The letter was signed by the American Bankers Association, the Mortgage Bankers Association and the Counsel of Insurance Agents and Brokers, among others.

The National Association of Realtors has separately called for "the longest extension possible."