Fed Governor Faces Unprecedented Removal Attempt
Federal Reserve Governor Lisa Cook has forcefully rejected allegations of mortgage fraud made by a Trump administration official, describing the claims as completely baseless in a formal letter to Attorney General Pam Bondi. The accusations have triggered an unprecedented constitutional battle, marking the first time in the Federal Reserve's 112-year history that a sitting president has sought to remove a governor from the central bank.
Cook's legal team, led by attorney Abbe Lowell, responded on Monday to a criminal referral made in August by Bill Pulte, director of the Federal Housing Finance Agency. President Donald Trump has used these allegations as grounds to attempt Cook's removal from her position.
The Mortgage Controversy Explained
The case centres on properties owned by Cook in Ann Arbor, Michigan, and Atlanta, Georgia. Pulte alleged that Cook improperly declared both residences as her primary home in mortgage documents, which could potentially result in more favourable loan terms. In August, Pulte declared on social media platform X: "Do not declare two principal residences in President Trump's America. Mortgage fraud is a serious crime and must be prosecuted as such."
However, Cook's legal team argues the case rests on "one stray reference" in a 2021 mortgage document that was "plainly innocuous" when considered alongside other accurate disclosures. The letter states unequivocally: "There is no fraud, no intent to deceive, nothing whatsoever criminal or remotely a basis to allege mortgage fraud."
Lowell provided detailed context for each property. Cook has primarily lived in the Ann Arbor home since purchasing it in 2005, making her designation as a primary residence in a June 2021 refinancing application accurate. When she bought an Atlanta condominium a month later, a single document referred to it as her primary residence, which Lowell characterised as an "isolated notation" without fraudulent intent.
Broader Political Implications
The attempted removal comes as President Trump has repeatedly criticised the Federal Reserve for not cutting interest rates quickly enough. If successful, the removal would allow Trump to appoint a fourth member to the Fed's seven-member board, securing a conservative majority that could significantly influence monetary policy.
Cook, who became the first Black woman to serve on the Fed's governing board when appointed by President Joe Biden in 2022, has taken legal action to retain her position. The Supreme Court ruled last month that she could remain in her role while challenging the administration in court, with arguments scheduled for January.
The controversy extends beyond Cook, as Pulte has made similar mortgage fraud allegations against prominent Democrats including New York Attorney General Letitia James, Senator Adam Schiff of California, and California Representative Eric Swalwell. Cook's legal team alleges partisan bias, noting that Pulte has shown little interest in investigating similar claims against Trump administration officials or Republican allies.
Meanwhile, Pulte himself faces increasing scrutiny within the administration. His recent advocacy for 50-year mortgages attracted widespread criticism for potentially dramatically increasing total loan costs. As self-appointed chairman of Fannie Mae and Freddie Mac, he has also unsettled the housing industry by removing ethics officials and top leadership from the government-sponsored lending giants.
