President Donald Trump demanded the resignation of Federal Reserve Governor Lisa Cook on Wednesday, amid accusations of mortgage fraud. The allegations, publicized by Bill Pulte, the head of the U.S. Federal Housing Finance Agency, involve Cook's mortgage applications for two properties, which were said to be misrepresented to obtain better loan terms.
Bill Pulte's referral to the Justice Department claims Cook identified a Michigan home as her principal residence on June 18, 2021, with an occupancy expectation within 60 days. However, within two weeks, she also acquired a condominium in Atlanta, Georgia, designating it as her primary residence as well. This practice, known as "occupancy fraud," can be financially advantageous, as mortgage lenders often offer lower interest rates for owner-occupied homes versus rental properties.
The situation escalated when Pulte noted that by September 2022, the Atlanta condo was listed for rent, and Cook did not report rental income from the property in her federal disclosures, as reported by The Gateway Pundit. President Trump, expressing his views on Truth Social, demanded that Cook "resign, now!!" and raised questions about Federal Reserve Chair Jerome Powell's awareness and response to the misconduct within the bank's leadership.
The allegations come at a sensitive time for Cook, who was a contentious Biden appointee, joining the Fed’s governing board in 2022 and reappointed in 2023 to a 14-year term. Her confirmation faced opposition from Senate Republicans due to her perceived lack of monetary policy experience. Her supporters, however, highlighted her academic credentials as an economics professor at Michigan State University and her historic appointment as the first black woman on the Fed's board.
Trump's call for Cook’s resignation could have significant implications for the Federal Reserve's leadership. If Cook were to step down, Trump would have the opportunity to nominate a replacement, potentially altering the Fed’s future direction. Trump has shown interest in reshaping the central bank's leadership, even considering Governor Stephen Miran for a more significant role and contemplating replacing Chair Jerome Powell by the end of his term in 2026.
The current clash between Trump and the Fed has been intensifying, particularly over interest rate policies. Trump has criticized the Fed for not reducing rates, claiming it hampers U.S. growth, while Powell defends steady rates as necessary for controlling inflation and maintaining economic stability. This disagreement underscores the broader debate over the central bank's independence and Trump's potential actions in a second term.
Allegations of mortgage fraud are taken seriously by regulators, as they can distort housing markets and undermine the integrity expected of Federal Reserve governors. The Fed has not yet commented on the accusations or Trump’s demand for Cook's resignation. This standoff highlights the growing politicization of the Federal Reserve, an institution that has traditionally been shielded from partisan disputes.
