September 6, 2025
Fed governor Lisa Cook is fighting to keep her job while battling DOJ and Trump-era mortgage fraud allegations.
Just days after Federal Reserve governor Lisa Cook revealed plans to sue over Donald Trump’s order for her removal, the Justice Department has opened an investigation into alleged mortgage fraud tied to her.
On Sept. 4, an anonymous source disclosed information on the subpoenas investigators issued in a probe into Cook, following a criminal referral from the nation’s top housing regulator, AP reports. The inquiry comes amid Cook’s legal battle over Trump’s move to oust her last month, an action she argues is his attempt to exert political control over the traditionally independent central bank that sets interest rate policy.
“Predictably and recognizing the flaws in challenging their illegal firing of Governor Cook, the administration is scrambling to invent new justifications for its overreach,” Cook’s lawyer, Abbe David Lowell, said in a statement. “This Justice Department — perhaps the most politicized in American history — will do whatever President Trump demands.”
Appointed by President Joe Biden, Cook made history in 2023 as the first Black woman to serve on the Federal Reserve’s board of governors, with a term lasting until 2038. The probe into her stems from allegations made by Trump appointee Bill Pulte, who accused Cook of committing mortgage fraud tied to two properties she bought in 2021, prior to her Fed appointment. Pulte alleges that Cook claimed both an Ann Arbor, Michigan, home and an Atlanta, Georgia, home as primary residences to secure more favorable loan terms, since second homes or rental properties typically face higher mortgage rates.
The inquiry is being led by Ed Martin, head of the Justice Department’s Weaponization Working Group, in coordination with U.S. Attorney offices. Martin is also overseeing mortgage fraud probes into two of Trump’s Democratic critics, Sen. Adam Schiff of California and New York Attorney General Letitia James, both of whom deny wrongdoing.
Meanwhile, Pulte has avoided questions about whether he’s applying the same scrutiny to Trump ally Ken Paxton, the Texas attorney general and Senate candidate, who took out mortgages on three properties, all listed as his primary residence.
The day the probe was announced, the Justice Department asked a Washington federal judge to permit Cook’s immediate removal, rejecting her claim that Trump is trying to seize control of the Federal Reserve as “baseless.” Cook’s attorneys countered that her firing was unlawful, noting that Fed governors can only be dismissed “for cause,” typically defined as inefficiency, neglect of duty, or misconduct while in office. They argued she was denied a hearing and a chance to respond, and maintain that she never engaged in mortgage fraud.
Economists, meanwhile, warn that allowing the White House to exert control over the Federal Reserve could politicize interest rate decisions, potentially keeping borrowing costs lower to suit Trump’s agenda. The case could mark a pivotal moment for the Fed’s 112-year history, which was built on independence from political pressure to safeguard its ability to make tough economic calls, such as raising rates to curb inflation.
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