Cook, accused of mortgage fraud, says he will not resign after being bullied by Trump.
The U.S. Department of Justice has plans to investigate Federal Reserve Governor Lisa Cook and plans to notify Federal Reserve Chair Jerome Powell of the investigation and encourage her to be removed, Bloomberg News reported.
A letter to Powell from Ed Martin, a Department of Justice (DOJ) official who led a similar investigation into California Sen. Adam Schiff and New York Attorney General Letitia James, said Cook’s case “needs further review,” Bloomberg reported Thursday.
“At this point, I recommend you remove Mr. Cook from your board,” Martin wrote according to Bloomberg. “Do it today before it’s too late! After all, no American doesn’t think it’s appropriate for her to serve that clouds hanging from her during this time.”
DOJ did not immediately reply to requests for comment.
Asked about the report, a Fed spokesman mentioned Cook’s statement Wednesday when she said she was “bullying” to step down after President Donald Trump ordered him to resign based on allegations about mortgages he has in Michigan and Georgia.
The Federal Reserve Act does not provide the power of the GRB chairman to remove another member of the board.
Cook, the first black woman to become Fed governor, serves a 14-year term that began in 2023 after her second Senate confirmation.
Efforts to remove Cook will bolster Trump’s ongoing efforts to unleash campaigns against diversity, equity and inclusion (DEI) and gain influence over the US central bank and lower interest rates.
Supplied under pressure
Central bankers from around the world will meet at Grand Teton National Park on Thursday to open the Kansas City Fed’s annual Jackson Hole Symposium, with Powell giving a keynote address on Friday, sketching out the economic views and investors’ hopes.
“I’m just saying I know she’s a great economist and a person of high integrity,” Cleveland President Beth Hammack told Yahoo Finance at the event.
William Prute, director of the Federal Housing Finance Agency, who referenced Cook’s allegations of fraud this week to the Department of Justice, said they were arising as part of a regular investigation into mortgage fraud by his agency and were not “witch hunts.”
“Deception of people is nothing new,” Plute told Bloomberg TV. “I believe she committed a mortgage fraud,” he said that the public records clearly show fraud and that special exemptions should not be given for strong people. He said the fraud was “self-evident.”
Cook has not yet explicitly addressed Pulte’s accusations in a statement Wednesday only. “I am trying to take my financial history seriously as a member of the Federal Reserve, so I gather accurate information and answer accurate questions and provide facts.”
The Fed is stabilizing the year in the 4.25% to 4.5% range due to concerns that Trump’s tariffs could rekindle inflation, which is still above the Fed’s 2% target. Recent labor market data, including reports showing the profits of an average of 35,000 jobs between May and July, has raised concerns from Fed policymakers that borrowing costs could be a little too high, potentially reducing interest rates by a quarter point at the Fed’s September meeting.
That’s well below the few percentage points Trump is looking for.
Trump can name his new chair when Powell’s term ends in May. Scott Bescent, the US Treasury Secretary, who leads the search, has almost 12 candidates, all of whom have expressed support for the big cuts and major changes to the central bank. Traditionally, when the period of leadership ends, the Fed chair will resign, but there is speculation that Powell will remain until his term as governor ends in 2028, denies the opportunity for Trump to set up more loyalists to integrate his control over the central bank.
Trump has appointed economic advisor chairman Stephen Milan, a critic and enthusiastic supporter of Trump’s tariffs and other policies.
