According to Reuters, the U.S. Justice Department (DOJ) has begun a criminal mortgage fraud investigation into Federal Reserve Governor Lisa Cook, and has issued grand jury subpoenas in Georgia and Michigan.
The investigation began in late August, as Federal Housing Finance Agency (FHFA) Director Bill Pulte accused Cook of mortgage fraud after she designated a Michigan home and an Atlanta condominium as primary residences on loan applications.
“U.S. Federal Housing FHFA, alleges in a Criminal Referral to the Department of Justice that Federal Reserve Governor, Lisa D. Cook, committed mortgage fraud by designating her out of state condo as her primary residence, just two weeks after taking a loan on her Michigan home where she also declared it as her primary residence,” said Pulte via the social media platform X. “When someone commits mortgage fraud, they undermine the faith and integrity of our System. It does not matter who you are—no one is above the law. We have sent a Criminal Referral to the Department of Justice regarding the allegations against Ms. Cook, and the DOJ should go wherever the facts may lead them.”
Pulte posted a series of images and documents on X regarding Cook’s Michigan residence and another described as an “Atlanta condo.”
The DOJ investigation is being conducted by Pardon Attorney Edward R. Martin Jr., who was tapped by U.S. Attorney General Pam Bondi as a special assistant U.S. attorney to assist with mortgage fraud investigations involving public officials, along with the U.S. Attorneys’ offices in the Northern District of Georgia and the Eastern District of Michigan.
Shortly after Pulte’s charges against Cook became public, President Trump dismissed the Federal Reserve Governor over mortgage fraud allegations via a letter posted to Truth Social.
“Pursuant to my authority under Article II of the Constitution of the United States and Federal Reserve Act of 1913, as amended, you are hereby removed from your position on the Board of Governors of the Federal Reserve, effective immediately,” said President Trump in the letter. “The Federal Reserve Act provides that you may be removed, at my discretion, for cause, See 12 U.S.C. 242. I have determined that there is sufficient cause to remove you from your position.
Cook fired back, filing a lawsuit claiming that the President lacks the authority to remove her from her position. In the suit, filed in federal court in Washington, D.C., Cook claims Trump violated a federal law allowing him to remove a Fed governor only “for cause.” The case was assigned to U.S. District Judge Jia Cobb, an appointee of former President Joe Biden.
Cook also filed a motion seeking a temporary restraining order declaring that Trump’s efforts to fire her are unlawful, and bars the Fed from taking steps to remove her pending further litigation.
“This case challenges President Trump’s unprecedented and illegal attempt to remove Governor Cook from her position which, if allowed to occur, would the first of its kind in the Board’s history,” wrote Cook’s legal team from Lowell & Associates in the suit. “It would subvert the Federal Reserve Act (FRA), which explicitly requires a showing of ‘cause’ for a Governor’s removal, which an unsubstantiated allegation about private mortgage applications submitted by Governor Cook prior to her Senate confirmation is not.”
President Trump has pushed the Federal Reserve to slash rates, and in the process, has openly criticized Fed Chair Jerome Powell for his stewardship of monetary policy.
The President does not have direct control over the Federal Reserve’s policy decisions, but does have influence. The President can nominate and appoint members of the Federal Reserve Board, including the Fed Chair, which can influence the overall direction of the Fed, and can also voice their opinions about monetary policy. The President selects one member of the Board of Governors to serve as Chair of the Board, who also serves as the Federal Open Market Committee (FOMC) Chair.
The FOMC, which makes the actual monetary policy decisions, is comprised of all seven governors and five of the 12 regional Federal Reserve Bank Presidents. While the chair has one vote like the other governors, the structure is designed to prevent one individual, including the president, from dictating decisions and policies. Trump appointed Powell as head of the Federal Reserve during his first term in 2018, with his term ending in May 2026.
The Federal Reserve System performs five general functions to promote the effective operation of the U.S. economy:
- To promote maximum employment, stable prices, and moderate long-term interest rates in the U.S. economy;
- Promotes the stability of the financial system and seeks to minimize and contain systemic risks through active monitoring and engagement in the U.S. and abroad;
- Promotes the safety and soundness of individual financial institutions and monitors their impact on the financial system as a whole;
- Fosters payment and settlement system safety and efficiency through services to the banking industry and the U.S. government that facilitate U.S.-dollar transactions and payments; and
- Promotes consumer protection and community development through consumer-focused supervision and examination, research and analysis of emerging consumer issues and trends, community economic development activities, and the administration of consumer laws and regulations.
