When President Donald Trump dismissed Federal Reserve Board Governor Lisa Cook earlier this week, it was not just another shakeup inside Washington’s corridors of power. It marked the dramatic arrival of artificial intelligence into America’s highest-stakes legal and political battles, thanks to a new partnership between the federal government and Palantir—the controversial data analytics giant founded by billionaire Peter Thiel.
At the center of this unfolding saga is Bill Pulte, a 37-year-old heir to a homebuilding fortune and Trump’s recent appointee as director of the Federal Housing Finance Agency (FHFA). Pulte, eager to step out from his family’s shadow, announced in May that he had teamed up with Palantir to launch an “AI-powered Crime Detection Unit (CDU)” at the FHFA. The CDU’s mission? To root out fraud across the vast mortgage portfolios managed by Fannie Mae and Freddie Mac, the two government-backed mortgage giants.
“No one is above the law,” Pulte declared at a press conference, according to The Daily Beast. “In partnership with Palantir, Fannie Mae’s Crime Detection Unit will increase safety and soundness by rooting out bad actors in our housing system. This cutting-edge AI technology will help us find criminals who try to defraud our system.”
Fannie Mae’s President and CEO Priscilla Almodovar was quick to tout the new system’s power. “By integrating this leading AI technology, we will look across millions of datasets to detect patterns that were previously undetectable,” she told reporters. “This new partnership will combat mortgage fraud, helping to safeguard the U.S. mortgage market for lenders, homebuyers, and taxpayers.”
The claims were not just hype. In early tests, the Palantir-assisted CDU reportedly detected mortgage fraud in seconds that would have taken teams of investigators months to uncover. Palantir co-founder and CEO Alex Karp predicted, “This partnership with Fannie Mae will set off a revolution in how we combat mortgage fraud in this country. We are bringing the fight directly to anyone who attempts to defraud our mortgage system and exploit hardworking Americans.”
Yet the CDU’s reach extended beyond major fraud. Its AI could just as easily sift through years-old mortgage applications, flagging even minor discrepancies among more than 50 million loans. And it was this capability that thrust Lisa Cook into the crosshairs.
According to The Daily Beast, Palantir’s algorithms uncovered that Cook, a respected economist and Federal Reserve Board Governor, had filed two mortgage applications for different homes in Michigan and Georgia just two weeks apart. In both, she claimed each property as her primary residence, qualifying for more favorable rates. The AI even scoured the internet for rental listings, allegedly finding that one of the supposed primary residences had been listed for rent.
Armed with this information, Pulte filed a criminal referral with Ed Martin, a Department of Justice Special Attorney and director of the Weaponization Working Group. Martin, whose group was established to investigate alleged abuses of law enforcement for political purposes, had previously been investigating other Trump adversaries—New York Attorney General Letitia James and Senator Adam Schiff—for similar alleged misstatements on mortgage applications. Those earlier cases, according to The Daily Beast, predated Palantir’s involvement and required far more labor-intensive investigative work.
With Palantir’s AI, however, the process was nearly instantaneous. Pulte was quick to trumpet the development on social media, writing, “The sanctity and integrity of mortgage applications and mortgage contracts are paramount. Violating the integrity of these agreements means putting the entire country at risk. This is why, in my mind, mortgage fraud is such a serious crime.”
President Trump wasted no time. He sent Cook a letter informing her that she had been fired. Cook, for her part, fired back with a lawsuit, arguing that a Federal Reserve Board Governor can only be dismissed “for cause”—and that “an unsubstantiated allegation about private mortgage applications submitted by Governor Cook prior to her Senate confirmation” did not meet that bar, as her lawyer Abbe Lowell put it. A federal judge in Washington, D.C. has scheduled a hearing for 10 a.m. Friday, August 29, 2025.
The stakes are high. Legal scholars and political observers alike note that this case could wind up before the U.S. Supreme Court, setting precedent on both the independence of the Federal Reserve and the use of AI in federal investigations. It also raises thorny questions about the weaponization of technology against political opponents—a concern that has drawn criticism from across the political spectrum.
For supporters of the administration, the partnership with Palantir is a bold step toward rooting out fraud and restoring trust in the nation’s financial systems. The ability to analyze millions of records in seconds, they argue, is a powerful tool for justice. “We are bringing the fight directly to anyone who attempts to defraud our mortgage system and exploit hardworking Americans,” Palantir’s Karp said, echoing a sentiment that resonates with many Americans frustrated by financial crimes that often go unpunished.
Critics, however, see something more troubling. They point to the possibility that such technology could be used to selectively target political adversaries, undermining the principles of fairness and due process. The fact that the first high-profile targets of the CDU’s investigations were all prominent critics of President Trump—James, Schiff, and now Cook—has only fueled suspicions. Some worry that the combination of Palantir’s surveillance prowess and the government’s prosecutorial power could create a chilling effect on dissent.
Meanwhile, the Palantir story doesn’t end with the FHFA. In a related development, Health and Human Services Secretary Robert F. Kennedy, Jr. named his top deputy, Jim O’Neill, as acting director of the Centers for Disease Control and Prevention (CDC), replacing the recently ousted Susan Monarez, who is also contesting her firing. O’Neill, a longtime Thiel confidant, previously served as CEO of the Thiel Foundation and co-founded the Thiel Fellowship, which famously pays college students to drop out and pursue entrepreneurial ventures. The CDC, like the FHFA, is now expected to make extensive use of Palantir’s technology.
Neither the FHFA nor Palantir responded to The Daily Beast’s requests for comment about the details of their partnership. But the implications are clear: the fusion of advanced AI with the machinery of government is rapidly reshaping the landscape of American law, politics, and public health.
As the legal battle over Lisa Cook’s firing heads to court, and as Palantir’s influence spreads through other agencies, the nation is left to grapple with profound questions about power, privacy, and the future of accountability in an age of artificial intelligence. The outcome of these disputes may well chart the course for how technology and politics intermingle in the years ahead.
