Former Federal Reserve Governor Lisa Cook, recently fired by President Donald Trump, has acknowledged manufacturing documents connected to her personal mortgage applications.
Trump removed Cook earlier this week after citing mortgage fraud allegations referred by housing regulator Bill Pulte.
In a letter to Cook, Trump wrote, “Pursuant to my authority under Article II of the Constitution of the United States and the Federal Reserve Act of 1913, as amended, you are hereby removed from your position on the Board of Governors of the Federal Reserve, effective immediately. I have determined that there is sufficient cause to remove you from your position.”
Cook, appointed to the Fed’s Board of Governors by President Joe Biden, has filed a lawsuit challenging her removal.
The suit, assigned to a Biden-appointed federal judge, names Trump, the Federal Reserve Board of Governors, and Chairman Jerome Powell as defendants. She is represented by attorneys Abbe Lowell and Norm Eisen.
At the center of the case is a dispute over Cook’s real estate holdings. Pulte’s referral alleges Cook committed mortgage fraud by misrepresenting the occupancy status of two properties.
According to the referral, Cook obtained a mortgage for a Michigan home as her “primary residence” and, within weeks, claimed the same status for a condo in Atlanta.
“We have obtained a document Lisa Cook submitted to the U.S. Government while serving as Federal Reserve Governor. In it, on February 28, 2023, she represents to the U.S. Government that the Atlanta property is her personal residence,” Pulte stated. “However, Lisa Cook, as a then-sitting Fed Governor and six months earlier, on September 1, 2022, appears to have listed that same property for rent.”
Pulte argued that the timing of the two loans indicated Cook’s lenders may not have been aware of each other’s underwriting processes, a situation he described as consistent with occupancy fraud. Such cases typically involve borrowers designating multiple properties as primary residences to obtain lower interest rates or more favorable terms.
Cook’s legal complaint did not directly dispute the timeline of her mortgage filings but framed the allegations as overstated.
The complaint stated that the president’s justification for removal was “the unsubstantiated and unproven allegation that Governor Cook ‘potentially’ erred in filling out a mortgage form prior to her Senate confirmation.”
Her lawyers argued that even if errors occurred, they did not rise to the legal standard of “cause” for removal under the Federal Reserve Act.
The filing further acknowledged that Cook had manufactured certain documents but attributed the matter to clerical mistakes.
“Even if the President had been more careful in obscuring his real justification for targeting Governor Cook, the President’s concocted basis for removal—the unsubstantiated and unproven allegation that Governor Cook ‘potentially’ erred in filling out a mortgage form… does not amount to ‘cause,’” the complaint read.
The case has drawn heightened attention given Cook’s appointment as the first Black woman to serve on the Federal Reserve Board in its 111-year history — an attempt by the former Biden administration to add diversity to the powerful financial body.
Her lawyers emphasized this in their filing, noting: “Governor Cook is the first Black woman to sit on the Federal Reserve’s Board.”
The outcome of the lawsuit could set precedent for how presidents may exercise removal powers over Federal Reserve governors, a body historically viewed as independent from partisan pressures.
Legal experts say the dispute will likely turn on how courts interpret “cause” under the Federal Reserve Act, as well as the weight of the allegations against Cook.
The Federal Reserve has not issued a public statement regarding Cook’s dismissal or the pending litigation. At stake in the lawsuit is a potential federal court ruling clarifying that the Federal Reserve is under the authority of the executive branch or else it is wielding “unconstitutional” authority.
