Justice Department probing Federal Reserve Gov. Lisa Cook for mortgage fraud

WASHINGTON — The U.S. Justice Department opened a criminal investigation into whether Federal Reserve Governor Lisa Cook committed mortgage fraud — ratcheting up pressure in President Donald Trump's bid to oust her from the central bank.

Federal prosecutors have issued subpoenas seeking information related to allegations that Cook misrepresented information on mortgage applications, according to people familiar with the matter, who asked not to be identified discussing the ongoing probe.

Trump said last month that he was removing Cook after Federal Housing Finance Agency Director Bill Pulte accused her of committing mortgage fraud regarding properties in Michigan and Georgia. Cook has sued the administration to stay on the job, with her lawyer saying the president lacked valid grounds to remove her and that she never committed mortgage fraud.

The fight over whether Cook can remain on the job has quickly emerged as the main flash point in Trump's bid to assert more control over the Fed, which he has repeatedly called on to lower interest rates. In her lawsuit, Cook cast his attempt to fire her as a power grab that could cause "irreparable harm" to the U.S. economy.

'Primary residence'

Pulte has claimed that Cook fraudulently listed homes in Michigan and Georgia as a "primary residence" when she obtained mortgages in 2021 to secure more favorable terms on loans. In response, Cook's lawyers have said that if there were any errors she didn't mean to deceive anyone, and no one was harmed, a standard known as materiality. They have also suggested that an unintentional "clerical error" may have been behind the dispute.

On Thursday, Cook's attorney, Abbe Lowell, again said that his client didn't commit fraud. "The questions over how Governor Cook described her properties from time to time, which we have started to address in the pending case and will continue to do so, are not fraud, but it takes nothing for this DOJ to undertake a new politicized investigation, and they appear to have just done it again," Lowell said in a statement.

The Justice Department didn't respond to a request for comment on the probe. The Wall Street Journal reported the investigation earlier on Thursday.

Trump insists that he has "cause" to fire Cook and said the allegations against her were sufficient because she'd been previously accused of lying in financial documents.

Following Pulte's allegations, which he referred to the Justice Department, Trump wrote a letter to Cook saying that he was removing her immediately in light of her "deceitful and potentially criminal conduct in a financial matter."

Cook has asked a judge to allow her to remain on the job while her lawsuit against the administration proceeds. The Fed hasn't taken a position on the fight in court, only saying that it will respect any court rulings.

Trump filing

Meanwhile, the Justice Department on Thursday made fresh arguments about why Trump should be allowed to oust Cook while she challenges her removal, saying her claim that her termination is a pretext to get her out of the way and lower interest rates is "baseless."

"Dr. Cook's policy disagreements with the President cannot be used to immunize her from the consequences of her misconduct or removal for such a cause-based rationale," the government said a the filing, which asks the court to deny Cook's request for a temporary court order blocking her dismissal.

U.S. District Judge Jia Cobb in Washington, who held an emergency hearing on Cook's request last week, hasn't said when she'll issue a decision.

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