On August 20, 2025, President Donald Trump ignited a political firestorm by publicly demanding the immediate resignation of Federal Reserve Governor Lisa Cook, citing unproven allegations of mortgage fraud. The controversy, swirling at the heart of the U.S. central banking system, has cast a fresh spotlight on the independence of the Federal Reserve and the mounting pressure from the White House to steer monetary policy in a direction more favorable to the administration's economic goals.
The allegations against Cook were first aired by Bill Pulte, director of the Federal Housing Finance Agency and a close Trump ally. Pulte, who oversees housing finance giants Fannie Mae and Freddie Mac, revealed on social media that his office had investigated Cook and found what he described as apparent falsification of bank documents to obtain more favorable mortgage terms. In a letter addressed to Attorney General Pam Bondi—posted publicly on X (formerly Twitter)—Pulte claimed Cook had declared both a house in Michigan and a condo in Georgia as her primary residences on separate mortgage applications filed just two weeks apart in 2021. The Georgia condo, he noted, was listed as a rental property two months later, a move that can sometimes raise red flags with lenders who typically reserve better loan rates for primary residences.
Pulte's letter, which he described as a "criminal referral," urged the Justice Department to open a formal investigation. "How can this woman be in charge of interest rates if she is allegedly lying to help her own interest rates?" Pulte posted on social media, echoing the administration's growing skepticism of Cook's role at the Fed.
Within hours, President Trump seized on the allegations, posting on his Truth Social platform, "Cook must resign, now!!!"—a sentiment he has since repeated in interviews and public appearances. Trump’s demand comes as part of a broader campaign to exert influence over the Federal Reserve, which he has repeatedly accused of keeping interest rates too high and stymieing economic growth. According to NPR, Trump has not only criticized Cook but has also been outspoken in his attacks on Fed Chairman Jerome Powell, whom he regularly refers to as "Too Late," and has even questioned the cost overruns of the Fed's $2.5 billion headquarters renovation in Washington, D.C.
To date, neither Cook nor the Federal Reserve has publicly responded to the allegations or to the president's calls for her resignation. The Justice Department has also declined to comment, as reported by The New York Times. The White House has remained similarly silent, despite repeated inquiries from several media outlets, including the BBC.
Lisa Cook, appointed in 2022 by then-President Joe Biden, is the first Black woman to serve as a governor on the Federal Reserve Board. Her confirmation was a narrow victory, with Vice President Kamala Harris casting the tie-breaking vote in the Senate after a party-line split. Before joining the Fed, Cook was a professor at Michigan State University and a prominent advocate for diversity in economics, having helped lead the American Economic Association’s summer program for underrepresented students. According to The New York Times, Cook’s research has focused on international economics and racial disparities in labor markets.
Cook’s term on the Fed board is set to expire in January 2038, meaning that her resignation would open the door for Trump to appoint a like-minded successor. The seven-member board currently includes two other Trump appointees—Christopher J. Waller and Michelle W. Bowman—and the recent surprise resignation of Governor Adriana Kugler earlier this month has already allowed Trump to nominate his economic adviser, Stephen Miran, to fill the vacant seat, pending Senate confirmation.
As BBC News highlights, the timing of these moves is critical. The next meeting of the Federal Reserve’s policy-making Open Market Committee is scheduled for mid-September, with many economists and investors expecting a 0.25 percentage point rate cut in response to a recent slowdown in the labor market. Trump has made no secret of his desire for even lower rates, believing they will bolster economic growth and ease the burden of government debt repayment. In fact, he has frequently floated the idea of replacing Jerome Powell as Fed Chair when Powell’s term ends in May 2026. Treasury Secretary Scott Bessent recently told CNBC that the administration is considering "11 very strong candidates" for the role, with interviews set to begin in September.
Despite the high-stakes drama, the legal path to removing a sitting Fed governor is far from straightforward. The Supreme Court has reaffirmed that members of the Board of Governors can only be dismissed for "cause," which legal scholars interpret as requiring proof of lawbreaking or gross misconduct. So far, the allegations against Cook—while serious—remain unproven, and no formal investigation has been announced by the Justice Department.
Adding another layer of irony to the unfolding saga, Trump himself was found liable last year for inflating his net worth on loan applications to secure better interest rates. A New York judge ordered him to pay a fine of about $450 million, including interest, a ruling Trump is currently appealing, according to The New York Times. Meanwhile, Pulte has made similar mortgage-fraud allegations against other Trump antagonists, including Senator Adam Schiff and New York Attorney General Letitia James, both of whom have played prominent roles in legal actions against the former president.
Cook’s financial disclosures reveal that she obtained three mortgages in 2021, with interest rates ranging from 2.5 to 3.25 percent. She reported receiving income from renting out her Ann Arbor residence in 2024, but did not disclose rental income from the Georgia property at the time the allegations surfaced. These details, pulled from online records and ethics filings, form the crux of Pulte’s claims but have yet to be independently verified or substantiated by federal investigators.
At the heart of the controversy is the question of Federal Reserve independence. The Fed’s seven governors wield significant power over U.S. monetary policy, including setting benchmark interest rates and responding to inflation and unemployment. Traditionally, the central bank has operated at arm’s length from the White House, with presidents refraining from direct intervention. However, Trump’s aggressive tactics—ranging from public shaming to threats of legal action—have raised concerns among economists and policymakers about the potential for political interference to undermine the Fed’s credibility and effectiveness.
With the next Fed meeting looming and the political stakes rising, all eyes are on Jackson Hole, Wyoming, where Jerome Powell is expected to address an economics summit on August 22. Powell’s remarks could offer clues about the central bank’s future direction and whether the mounting pressure from the White House will have any tangible impact on interest rate policy.
As the story develops, the fate of Lisa Cook—and the broader question of central bank independence—remains uncertain. What is clear, however, is that the battle over the Federal Reserve’s leadership has become a defining issue in the ongoing struggle between the executive branch and the institutions charged with safeguarding the nation’s economic stability.
