The US Justice Department has opened a criminal investigation into mortgage fraud allegations against Federal Reserve Governor Lisa Cook, as her legal battle with President Donald Trump over her dismissal continues through the courts.
Subpoenas have been issued by department lawyers, according to reports by the Wall Street Journal and confirmed by other outlets. The probe follows Trump's attempt to fire Cook last month over unsubstantiated claims that she listed two properties as her primary residence, allegedly to obtain a better mortgage rate.
Cook, a voting member of the Fed board that sets interest rates, has refused to step down and filed a lawsuit against Trump, arguing her removal is unconstitutional and threatens the Fed's independence. Her lawyers contend the firing is 'unprecedented and illegal', and that federal law requires 'cause' for removal—which they say an unsubstantiated mortgage application allegation does not constitute.
In court filings, Cook's legal team suggested a clerical error might explain discrepancies in her mortgage records. She was appointed by President Joe Biden in 2022 for a 14-year term, making her the first Black woman to serve on the board.
US District Judge Jia Cobb heard arguments last week and has agreed to expedite the case, which is expected to ultimately reach the Supreme Court. Trump's actions against Cook are part of a broader White House campaign against the historically non-partisan Fed, including earlier threats to dismiss Chair Jerome Powell over interest rate policy.
Cook's lawyer, Abbe Lowell, criticised the investigation as politicised. This marks the third mortgage fraud inquiry by the Justice Department under Trump targeting Democratic officials, a pattern some experts label as 'lawfare'. Meanwhile, reports indicate several Trump cabinet members hold multiple primary-residence mortgages, which real estate experts say is often legal and rarely prosecuted.
