U.S. President Donald Trump on Monday took the unprecedented action of firing Lisa Cook, the first African-American woman to serve as a Federal Reserve governor, over claims of mortgage borrowing impropriety.
The president had called on Cook to resign on August 20 after U.S. Federal Housing Finance Agency Director William Pulte, who was appointed by Trump, accused her of claiming two of her mortgages as primary residences.
The U.S. Department of Justice said it was looking into the matter.
“I have determined that there is sufficient cause to remove you from your position,” Trump said in a letter to Cook posted on his Truth Social platform.Trump said there was sufficient evidence that Cook had made false statements on mortgage applications. “At 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.”
Hiwever, Reuters reports that Cook had been defiant about continuing onward at the Fed.
“I have no intention of being bullied to step down from my position because of some questions raised in a tweet,” she said on August 20. “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.”
Cook, who was nominated to the Fed’s Board of Governors by former President Joe Biden in 2022, took out the mortgages in question in 2021 when she was an academic. An official financial disclosure form for 2024 lists three mortgages held by Cook, with two listed as personal residences.
Pulte has claimed that Cook committed mortgage fraud by listing two of her mortgages as her primary residence, but he has provided no public evidence to back up his allegation. Loans for primary residences can carry lower borrowing rates.
In an interview with Bloomberg Television on August 21, Pulte said Cook’s alleged fraud is “self-evident” and easily seen in publicly available documents. Pulte also said the issues were uncovered as part of regular investigations rather than through a political witch hunt against those opposed by the Trump administration.
Pulte’s claims against Cook coincide with a broad effort by the Trump administration against diversity, equity and inclusion programs in the U.S. government, a process that has led to the departure of some prominent women and minorities.
The Trump administration has also targeted other political opponents, including U.S. Senator Adam Schiff, with similar accusations of mortgage fraud.
PRESSURE CAMPAIGN
The firing of Cook marked an escalation in Trump’s attempt to reshape the makeup of the Fed leadership ranks.
He has been pressuring the central bank for aggressive rate cuts at a time when Fed officials have kept them steady amid ongoing worries about inflation.
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The president has regularly threatened to fire Fed Chair Jerome Powell, who was nominated by Trump during his first term in the White House and then nominated for a second term by Biden.
Trump, who lacks the legal authority to fire the Fed chair except “for cause”, has backed away from that threat as Powell gets closer to the expiration of his term as Fed chief next May.
Cook’s exit from the Fed – she had been serving in a term that expired 2038 – could speed up the president’s reshaping of the Fed.
He recently elevated Fed Governor Michelle Bowman to be the central bank’s top bank regulator, and is believed to be considering Fed Governor Christopher Waller, who he named to the board in 2020, to succeed Powell.
Two other Biden appointments on the Fed board have some time left in their terms, while Powell could stay on as a governor until 2028 after the end of his term as head of the central bank.
Financial issues have been a regular issue for U.S. central bank officials in recent years. In 2021, the then-presidents of the Dallas and Boston Fed banks both resigned after revelations of active trading in financial markets.
While both were later cleared by the Fed’s in-house watchdog of wrongdoing, the central bank’s Inspector General nevertheless said their trading created the appearance of a conflict of interest.
In response to the controversy, the Fed tightened its ethics rules governing officials’ personal investing.
