The U.S. Department of Justice reportedly launched a criminal investigation into the actions of Federal Reserve Board Governor Lisa Cook on Thursday, issuing subpoenas related to allegations that she committed mortgage fraud.
On Aug. 15, Federal Housing Finance Agency Director Bill Pulte sent a letter to the DOJ requesting an investigation into Cook, alleging that she fraudulently claimed two homes as her primary residence to potentially obtain more favorable mortgage rates. Cook’s lawyers responded that an unintentional “clerical error” may have been behind the issue, and that she hadn’t meant to deceive anyone and that no one was harmed — a standard known as “materiality.”
Trump has used these charges as a basis for attempting to fire Cook from her seat on the Fed board, which would enable him to nominate a new member. This would potentially sway the balance of the central bank, which has historically been independent.
The issuance of the subpoenas — first reported by The Wall Street Journal, citing anonymous U.S. officials familiar with the matter — comes a week after Cook filed a lawsuit in federal court contesting what she claimed were “concocted” charges. Attorneys for Cook requested an emergency order for her to keep her seat on the board and “safeguard her and the Board’s congressionally mandated independence.”
On Tuesday, lawyers for Cook submitted a 34-page document urging U.S. District Judge Jia Cobb to support Cook’s motion for the temporary restraining order.
Trump’s attorneys responded with a 21-page memorandum Thursday, stating that Cook “remains unable to overcome the multiple independent legal obstacles to the relief she seeks.”
Pulte continued to criticize Cook and Federal Reserve Chairman Jerome Powell on social media Thursday.
“As evidenced by Jerome Powell’s silence on Lisa Cook, and his refusal to call for her stepping aside, Jerome Powell is corrupt as hell,” Pulte wrote.
Pulte’s comments come after months of attention paid to Powell, demanding interest rate cuts and accusing him of mismanaging the renovation of the Federal Reserve headquarters in Washington, D.C., which had been budgeted for $1.9 billion but due to cost overruns grew to $2.5 billion.
Trump has also been seeking to fill a vacant Board seat, left open by Adriana Kugler, who resigned Aug. 8. Trump nominated Stephen Miran, who serves as chair of the Council of Economic Advisers. Miran appeared Thursday before the Senate Banking Committee.
The battles for these seats on the Fed board have been a lightning rod on both sides of the political aisle. Democrats questioned Miran’s ability to uphold the central bank’s independence. Sen. Elizabeth Warren, D-Mass., said Miren would serve as Trump’s “puppet.”
If approved by Congress, Miran could possibly be in place before the Fed’s next meeting on Sept. 16-17.
