Trump Moves To Remove Fed Governor Lisa Cook After Mortgage Fraud Accusations

This story was initially published on Monday, August 25. We are updating the story asit develops.

UPDATE as of August 26

Monday evening, Trump announced in a unilateral move that he is removing Fed governor Lisa Cook from her post at the Federal Reserve. 

The president posted a letter to Truth Social stating his reasons for removing Cook from her position. Previously, ESSENCE reported that she was accused by FHFA chair Bill Pulte of mortgage fraud. 

“The American people must be able to have full confidence in the honesty of the members entrusted with setting policy and overseeing the Federal Reserve,” per Trump’s letter. “At a minimum, the conduct at issue exhibits the sort of gross negligence in financial transactions that calls into question your competence and trustworthiness as a financial regulator.”

After Federal Reserve Governor, Lisa Cook was accused of mortgage fraud last week, Donald Trump said he would fire her on Friday if she did not resign. She’s the first and only Black woman in the position. Current law limits the president’s ability to do so without cause. 

Cook’s nomination from Joe Biden in 2022, left the Spelman alum in a 50-50 deadlock that was ultimately deciding by a winning vote from Vice President Kamala Harris. Cook’s term isn’t supposed to end until 2038, according the Federal Reserve website.

Wednesday, Federal Housing Finance Agency (FHFA) head Bill Pulte posted a letter dated August 15 to the Department of Justice, calling for a criminal investigation into Cook on the grounds of mortgage fraud. He alleges the governor lied on applications to get favorable interest rates—specifically, “falsifying bank documents and property records.” 

Per Pulte’s letter, Cook obtained a mortgage in Michigan June 2021 and listed it as a “principal residence,” claiming that it would be her main home for 60 days.  Then, she purchased an Atlanta condo doing the same—within two weeks after the year of purchase on the Michigan property. Pulte is also saying that Cook might not have disclosed rental income from the Atlanta property, citing Zillow screenshots as supplemental evidence.

A 2023 study by the Federal Reserve Bank of Philadelphia, says that “owner-occupancy fraud” like the type Pulte is accusing Cook of, occurs rarely. Per that research, on average only about two to three percent of borrowers misstate their occupancy when applying for a mortgage.

Shortly after Pulte’s letter reached social media, Donald Trump linked to an article from Bloomberg, which picked up the housing chair’s accusations and also called for her resignation–threatening to fire her on the social media site, Truth Social. 

“Cook must resign, now!!!” The president wrote. 

In an official statement released by Cook, she said, “I have no intention of being bullied to step down from my position because of some questions raised in a tweet. I do intend to take any questions about my financial history seriously as a member of the Federal Reserve and so I am gathering the accurate information to answer any legitimate questions and provide the facts.”

While enroute to the Kennedy Center on Friday, Trump reiterated his statements, saying “What she did was bad.” 

The president might not be able to dismiss her from her duties as simply as one might expect. 

According to Section 10 of the Federal Reserve Act, a sitting president can only fire someone with “cause”—which is understood to mean gross misconduct.

Trump has been requesting that the Central Bank (which oversees the Federal Reserve) lower interest rates on loans. Jerome Powell, chair of the Federal Reserve, has been cautious primarily due to tariffs and the instability of the economy. 

In a speech, the chair gave on Friday, Powell alluded to a potential drop in September. Currently rates are at a range of 4.25 percent to 4.5 percent. Trump wants a three-point decrease. 

Publicly, Trump has referred to Powell as, “Mr. Too Late,” “a major loser” and “numbskull.”

In 2017, Trump appointed Powell to his first term and was later re-appointed by Biden to his current term. The president has since threatened to fire him on multiple occasions. According to the Federal Reserve website, his term will end in 2028.

Trump also appointed Pulte, who he announced through social media. 

“Bill needs no formal introduction to the Great Citizens of our Country, because they have seen, and many have experienced, his philanthropy firsthand, Trump wrote on Truth Social. “He believes in the incredible potential of our Nation and will help us restore the American Dream FOR ALL.”

Pulte has accused several of the president’s rivals of mortgage fraud since his appointment—most notably, Sen. Adam Schiff (D-Calif.) and New York Attorney General Leticia James. 

Schiff famously led the first impeachment inquiry against Trump and was quoted as saying, “No one is against the law.” 

In a letter similar to the one he wrote to the DOJ for Lisa Cook, Pulte wrote that James “has, in multiple instances, falsified bank documents and property records to acquire government backed assistance and loans and more favorable loan terms.” 

James, who sued Trump for fraud specifically to “enrich himself and cheat the system,” said that Pulte’s claims were, “baseless,” referring to them as a “revenge tour.”

In an opinion piece she once wrote for the New York Times, Cook said that economics isn’t supportive of women. “But if economics is hostile to women, it is especially antagonistic to Black women.”

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