Trump Aims to Oust Fed Governor Over Mortgage Fraud Claims

Federal Reserve Governor Lisa Cook faces escalating pressure as President Donald Trump has moved to remove her from the Board of Governors, citing allegations of mortgage fraud. The move has intensified ongoing tensions between Trump and Fed Chair Jerome Powell, who has signaled a potential rate cut in September. In a letter addressed to Cook and shared on Truth Social, Trump stated that there is “sufficient cause” to remove her, emphasizing the need for public confidence in the integrity of Fed officials. “In light of your deceitful and possibly criminal conduct in a financial matter, they cannot and I do not have such confidence in your integrity,” the letter stated [1]. Trump’s assertion comes after Federal Housing Finance Agency Director Bill Pulte alleged that Cook misrepresented her primary residence on mortgage applications for two properties. Pulte has referred the matter to the Justice Department for further investigation [2].

Cook, who was confirmed to the Fed board in 2022 by a narrow margin, was the first Black woman to hold the position. Her appointment was supported by then-Vice President Kamala Harris, who cast the tie-breaking vote to overcome a 50-50 Senate confirmation vote. Senate Democrats had strongly endorsed her nomination, citing her extensive experience in economics and global policy. “She understands how economic policy affects people in different parts of the country,” said Sen. Sherrod Brown during the confirmation process. Cook has spent a significant portion of her career researching post-Soviet Russian credit markets and has advised the Obama administration on international economic matters. She also contributed to policy discussions in Rwanda and Nigeria and has held academic positions at Michigan State University [1].

The allegations against Cook were first raised by Pulte in an August 20 post on X, where he claimed that she listed two properties — one in Michigan and one in Georgia — as her primary residence on loan applications. Pulte characterized this as a potential case of mortgage fraud and called for a criminal investigation. “She falsified bank documents and property records to acquire more favorable loan terms,” Pulte alleged in a letter to the Justice Department [2]. The FHFA director, who has been vocal in his criticism of other high-profile Democrats like New York Attorney General Letitia James and California Senator Adam Schiff, denied any political motivations behind his actions. He emphasized that mortgage fraud can carry criminal penalties of up to 30 years in prison, reinforcing the seriousness of the allegations.

Cook has denied wrongdoing and has vowed to continue serving on the Fed board. In a statement, she stated that the discrepancies in her property declarations occurred four years before her appointment and that she has no intention of resigning under pressure from the Trump administration. “I will not resign. I will continue to carry out my duties to help the American economy as I have been doing since 2022,” Cook said [2]. Her legal counsel, Abbe Lowell, has contested Trump’s authority to remove her, arguing that the president lacks the legal basis for such an action. The Supreme Court recently clarified that the Federal Reserve is a “quasi-private entity” distinct from other federal agencies, suggesting that Trump’s broad firing powers do not extend to the Fed [2]. Cook’s attorney has indicated that they will pursue legal action to challenge the removal order and ensure a proper judicial review.

The controversy has drawn sharp criticism from Democrats and independent economists. Senator Elizabeth Warren called the move an “authoritarian power grab” and warned that it violates the Federal Reserve Act. Former Treasury Secretary Larry Summers expressed concern that such actions could establish a dangerous precedent for federal governance, undermining the independence of key institutions. Aaron Klein, a senior fellow at the Brookings Institution, described the situation as a “kill shot at Fed independence,” suggesting that Trump is attempting to force the central bank into aligning with his policy preferences. The legal and political ramifications of the dispute could have lasting implications for the balance of power between the executive branch and independent financial institutions [2].

As the legal battle unfolds, the Federal Reserve continues to navigate a challenging economic landscape. Cook has supported the decision to keep interest rates stable for five consecutive meetings this year but has recently expressed concern over a weaker-than-expected jobs report. Fed Chair Powell has also indicated that a rate cut in September may be on the table. The outcome of the dispute involving Cook could impact the Fed’s policy decisions and broader public perception of its independence. Analysts note that if Trump successfully removes Cook, it may signal a shift toward greater executive control over the Fed, which could influence future monetary policy and investor confidence [2].

Source:

[1] Who is Lisa Cook, Federal Reserve governor targeted ... (https://thehill.com/homenews/administration/5470397-federal-reserve-governor-lisa-cook-bio/)

[2] Who Is Lisa Cook and What Did She Do to Get Fired? (https://time.com/7312213/lisa-cook-trump-fire-federal-reserve-governor-mortgage-fraud-powell-interest-rates/)

[3] Lisa D. Cook (https://en.wikipedia.org/wiki/Lisa_D._Cook)