DOJ Opens Mortgage Fraud Probe Into Fed’s Lisa Cook

Topline

A criminal investigation was launched by the Justice Department into allegations of mortgage fraud surrounding Federal Reserve Governor Lisa Cook, who has denied the claims and disputed President Donald Trump’s authority to oust her.

Cook has disputed the allegations, arguing President Donald Trump lacks authority to fire her.

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Key Facts

The Justice Department has issued grand jury subpoenas in Georgia and Michigan as part of a probe into whether Cook submitted fraudulent information on mortgage applications for properties in both states, Reuters and the Wall Street Journal reported, citing unnamed sources and U.S. officials familiar with the matter.

The allegations stem from a criminal referral issued by Federal Housing Finance Agency Director Bill Pulte last month, after Pulte claimed Cook falsified her resident status by listing two properties in Ann Arbor, Michigan, and Atlanta as her primary residence after taking mortgages in both properties.

Pulte also alleged Cook falsified bank documents and property records to acquire more favorable loan terms, and obtained mortgages that “do not meet certain lending requirements.”

Trump said he would fire Cook, whose term expires in 2038, over the claims, though Cook has challenged the move in court and accused Trump of an “unprecedented and illegal attempt” to remove her from the Fed.

Neither the Justice Department nor Abbe Lowell, Cook’s attorney, immediately responded to requests for comment.

Can Trump Fire Lisa Cook?

The Federal Reserve Act permits Trump to fire Fed officials “for cause,” though Cook claims she is shielded by Humphrey’s Executor v. United States, a 1935 ruling by the Supreme Court protecting members of independent boards from political interference. Trump has challenged the court precedent multiple times this year, after ousting board members at the National Labor Relations Board, Consumer Product Safety Commission and Merit Systems Protection Board. The Supreme Court noted in a ruling earlier this year the Federal Reserve is distinct from agencies where firings have been allowed, however.

Key Background

Cook, nominated by President Joe Biden to the Fed’s board in 2022, became the latest high-ranking Democrat targeted by the Trump administration over mortgage fraud allegations. Pulte’s allegations cite a $203,000, 15-year mortgage taken for an Ann Arbor property in June 2021 and a separate $540,000, 30-year mortgage for an Atlanta property that Cook took 14 days later. Pulte also claimed Cook listed the Georgia property for rent in 2022, though Cook’s financial disclosures that year and in 2023 did not include rental income tied to the address. Cook denied the claims, telling Forbes in a statement she had “no intention of being bullied to step down.” The DOJ has launched investigations into mortgage fraud claims against Sen. Adam Schiff, D-Calif., and New York Attorney General Letitia James. Schiff served as lead House manager during Trump’s impeachment trial in 2020, while James headed a successful civil fraud case against Trump. Both Schiff and James have disputed the allegations.

Tangent

The Senate Banking Committee opened a confirmation hearing for Stephen Miran on Thursday for an Federal Reserve board seat vacated by Adriana Kugler. Miran is likely to face questions about the central bank’s independence as Trump has pressured the Fed to lower interest rates throughout his second term, yet Miran said in his opening remarks that “independence of monetary policy is a critical element for its success.”