The Justice Department has reportedly initiated an investigation into Federal Reserve Governor Lisa Cook regarding alleged mortgage fraud just a day after President Trump encouraged individuals appointed by Biden to resign.
This move adds to the escalating scrutiny on the Federal Reserve from the Trump administration. They’ve faced backlash from various officials over their delayed interest rate hikes and a recent $2.5 billion renovation of their headquarters.
Bloomberg reported that Ed Martin, a senior official at the DOJ who has previously led investigations involving Senator Adam Schiff and New York State Attorney General Letitia James, wrote to Chairman Jerome Powell, indicating that Cook’s situation would ensure “greater scrutiny.”
“I strongly urge you to suspend Ms. Cook from her position at the Federal Reserve immediately,” Martin stated in his letter, emphasizing that serious questions regarding her role persist.
The DOJ was approached for comments, but representatives from the Federal Reserve opted not to comment.
Cook has firmly denied any wrongdoing, asserting that she did not forge documents to secure favorable loan terms, as first alleged by Bill Prute, who heads the Federal Housing Finance Agency.
“You won’t be pushed out based on unfounded claims circulating on social media,” Cook stated through a Fed spokesman. “I’ve received genuine inquiries about my financial history and have gathered the right information to respond.”
A former private equity manager and Trump supporter, Pulte, reached out to Attorney General Pam Bondi and DOJ employee Ed Martin on August 15, suggesting that Cook might have engaged in criminal behavior.
Pulte alleged that Cook had manipulated bank documents and property records to secure better loan terms and was potentially committing mortgage fraud.
He claimed that Cook labeled an Atlanta condo as her primary residence after obtaining a loan using her Michigan home.
The Wall Street Journal also indicated that the president might consider firing certain economists over these allegations.
Cook’s federal financial disclosures include three mortgages, which consist of a 2.5% interest loan on investment properties and two home loans at 3.25% and 2.875%. This data, from the Mortgage Bankers Association, shows that the average 30-year loan rates in 2021 fluctuated between 2.9% and 3.3%.
President Trump called for Cook to resign from the Fed in a recent post on Truth Social.
Democrats on the U.S. House Financial Services Committee have condemned Trump’s actions against Cook, vowing to oppose them.
“Donald Trump is spreading blatant lies to undermine the first Black woman serving on the Federal Reserve Commission, aiming to replace her with someone loyal to him,” they expressed in an X post.
Should Cook resign, it could pave the way for Trump to appoint another member to the Federal Reserve Committee, which would likely bolster efforts to influence interest rate cuts.
Trump has consistently critiqued Powell, labeling him as “slow,” and indicated that he might resign if rates aren’t lowered promptly.
The Federal Reserve is set to reconvene in Jackson Hole, Wyoming, on September 16th and 17th to discuss national borrowing rates.
Moreover, Trump has criticized the Federal Reserve for the $2.5 billion expenditure on renovations at their headquarters, a story that first emerged in April.
Republicans have hinted at a possible congressional investigation into the renovation project after Powell appeared to contradict official planning documents during his June testimony before the Senate Banking Committee.
If Powell becomes embroiled in a scandal, several potential candidates have emerged to succeed him, including current Fed Governor Christopher Waller, former Governor Kevin Warsh, and Kevin Hassett, who now leads Trump’s National Economic Council.
