In a high-stakes clash that has roiled financial markets and reignited debates over the independence of America’s central bank, President Donald Trump and his allies have launched a public campaign against Federal Reserve Governor Lisa Cook, demanding her resignation amid allegations of mortgage fraud. The controversy, which erupted on August 20, 2025, has drawn in the Department of Justice, prompted fierce reactions from lawmakers, and cast a new spotlight on the politicization of economic institutions at a critical moment for the U.S. economy.
The uproar began when Bill Pulte, the head of the Federal Housing Finance Agency (FHFA) and a close Trump ally, took to social media to accuse Cook of submitting fraudulent information on mortgage applications for properties in Michigan and Atlanta back in 2021. According to Pulte, Cook claimed both properties as her primary residence on applications submitted just two weeks apart—a move that, if true, could have allowed her to access better loan terms reserved for owner-occupied homes. Pulte’s post included images purportedly showing Cook’s signature, but offered little else in the way of hard evidence. He stated his intention to refer the matter to the Department of Justice for criminal investigation.
President Trump wasted no time amplifying the allegations, posting on his social media platform: “Cook must resign, now!!!” Behind closed doors, Trump reportedly considered going even further, telling aides he was exploring ways to fire Cook for cause if she refused to step down, according to The Wall Street Journal. The White House, however, declined to comment publicly on these deliberations.
Lisa Cook, who became the first Black woman to serve on the Federal Reserve Board after her appointment by President Joe Biden in 2022, responded swiftly and defiantly. “I have no intention of being bullied to step down from my position because of some questions raised in a tweet,” she said in a statement to The Wall Street Journal. “I do intend to take any questions about my financial history seriously as a member of the Federal Reserve and so I am gathering the accurate information to answer any legitimate questions and provide the facts.”
The Justice Department, for its part, has kept its cards close to the vest. While a department official told Reuters that the matter was being taken seriously, a spokesperson declined to comment further on the criminal referral. Cook’s federally filed financial disclosures show three mortgages taken out in 2021, including a 15-year 2.5% loan on an investment property and two loans on personal residences with rates between 2.5% and 3.25%. The timing of the loans—before Cook joined the Fed—has raised questions among legal experts about whether alleged private misconduct predating her federal service could be grounds for dismissal.
Columbia University law professor Lev Menand weighed in, telling The Wall Street Journal, “I think prior private misconduct would be a stretch” as a legally sufficient reason to fire a Federal Reserve governor. Under a 1935 law, the president can only remove a Fed governor “for cause,” typically interpreted as dereliction of duty or malfeasance. A recent Supreme Court ruling appeared to strengthen these protections, describing the Fed as “a uniquely structured, quasi-private entity” and suggesting its officials are beyond the president’s direct reach.
Still, the pressure campaign has continued to escalate. Pulte, whose agency traditionally has little to do with the Federal Reserve, has used his position to attack both Cook and Fed Chair Jerome Powell. He has lambasted Powell on social media and television, even sharing statements on FHFA letterhead that amplified unfounded rumors about Powell’s potential resignation. The White House’s attacks on the Fed have grown more intense as Trump has repeatedly pressed Powell to cut interest rates—a move the president argues is needed to boost a sluggish economy, but which Fed officials have resisted amid concerns about inflation.
This week’s events unfolded as Powell and other Fed governors gathered in Jackson Hole, Wyoming, for their annual conference. Powell is set to deliver his final Jackson Hole speech as Fed chair on Friday, August 29, 2025, with his term officially expiring in May 2026. Trump’s efforts to reshape the central bank’s leadership have been complicated by the long terms of Biden appointees like Cook, whose tenure extends to 2038. Currently, only two of the Fed’s seven board members—Christopher Waller and Michelle Bowman—were appointed by Trump. Both have argued for cutting interest rates and dissented against the Fed’s July decision to hold rates steady, backing their position with detailed economic arguments and challenging the administration’s claims about the inflationary impact of tariffs.
The sudden resignation of Governor Adriana Kugler earlier in August 2025 has given Trump an opening to nominate another ally to the board. Kugler did not provide a reason for her departure, which surprised colleagues and followed minor violations of the Fed’s strengthened policies on personal financial transactions. Trump has nominated Stephen Miran, a top economic adviser, to fill the seat, pending Senate confirmation.
Beyond the immediate controversy over Cook, the administration’s approach has sparked broader concerns about the politicization of economic institutions. According to The Wall Street Journal, critics warn that the White House’s pressure campaigns—and the use of regulatory agencies to target political opponents—risk undermining the credibility of the central bank and eroding global confidence in the U.S. financial system. “The harm here is real,” one editorial argued, warning that attacks on the Fed could drive up borrowing costs for families and businesses and destabilize markets.
Indeed, the Department of Justice has also opened investigations into similar mortgage fraud claims against prominent Democratic officials, including New York Attorney General Letitia James and California Senator Adam Schiff. Both have denied the allegations, with a spokesperson for James calling them a “weaponization of the justice system.” Attorney General Pam Bondi has authorized the use of grand juries in Virginia and Maryland to probe these separate cases—a move some see as part of a broader trend of law enforcement being used to settle political scores.
As the dust settles, the future of the Federal Reserve’s leadership remains uncertain. Investors are watching closely for any sign of a shift in monetary policy at the upcoming Jackson Hole conference, especially after recent weak labor-market numbers increased speculation about a possible rate cut at the Fed’s next meeting on September 17. For now, Lisa Cook remains steadfast in her position, vowing to answer legitimate questions and refusing to be intimidated by what she describes as a politically motivated campaign.
Amid the swirl of allegations, resignations, and investigations, the core questions persist: Can the Federal Reserve maintain its independence in the face of mounting political pressure? And what will the consequences be for American families and the broader economy if that independence is eroded? The answers may well shape the nation’s economic future for years to come.
