Fed Governor Lisa Cook Rejects Trump's Mortgage Fraud Claims

Federal Reserve Governor Lisa Cook has warned the administration of President Donald Trump that there is no legal basis to remove her from her leadership role at the central bank. The latest statement from her legal team comes as Trump persists in efforts to push her out of the position, a move widely seen as an attack on the Fed's independence.

Under U.S. law, Fed governors can only be removed for cause, not for political reasons. Trump has leveled mortgage fraud allegations against Cook, a Democratic appointee, in an attempt to meet that legal standard.

In a letter dated August 13, Cook's lawyers, Abbe David Lowell and Norman Eisen, issued a detailed rebuttal to the president's accusations. "This is the second time in a year we have explained why President Trump has no legal basis to remove Governor Cook," the lawyers stated.

"An inadvertent error is not fraud, as the President and a third of his Cabinet should know because they are allegedly alleged to have done the same thing. The attacks on Governor Cook are not about real estate paperwork; they are an effort by President Trump to bend the Federal Reserve to his will," the letter said.

The letter responds to an ultimatum from the Trump administration earlier this month. In a message dated August 5, the White House warned that Trump was considering removing Cook over sufficient grounds to believe she made false statements in one or more mortgage agreements. The administration gave her three weeks to respond.

This is the second time Trump has sought to use mortgage fraud allegations to remove Cook. In August 2025, he made similar accusations, telling reporters, "I will fire her if she doesn't resign." Cook responded with a lawsuit that reached the Supreme Court, alleging the charges were merely a pretext to remove her for policy differences.

In a 5-4 ruling in June, the Supreme Court blocked Trump from firing Fed governors at will. No president has ever attempted to remove a Fed official since the institution was established over a century ago. The Federal Reserve Act of 1913 enshrined certain protections for the bank to shield it from external influences that could harm the economy for political gain.

In his second term, Trump has sought to vastly expand executive power, and the Fed has been one of his targets. He has tried to increase influence over the central bank, particularly by pressuring members to quickly cut interest rates that have been kept high to combat inflation. However, experts warn that lowering rates too quickly could flood U.S. markets with cash, undermining the dollar's value.

Interest rates have been a point of contention with former Fed Chair Jerome Powell, who ended his term in May but remains a governor on the board. In January, Powell revealed the Trump administration had opened a criminal investigation into his actions regarding the renovation of the Fed headquarters.

Powell condemned the investigation as an intimidation tactic. "The issue here is whether the Fed can continue to set interest rates based on evidence and economic conditions - or instead, monetary policy will be dominated by political pressure or threats," he said in a statement at the time. In March, a federal judge quashed two subpoenas related to the investigation. The investigation was finally dropped in April, just before Powell's chairmanship ended.