US Justice Department Launches Criminal Mortgage-Fraud Probe into Federal Reserve Governor Lisa Cook

The United States Department of Justice has initiated a formal criminal investigation into Federal Reserve Governor Lisa Cook, centring on allegations of mortgage fraud. The inquiry follows a referral from the Federal Housing Finance Agency director, who alleges that Governor Cook claimed multiple homes as her primary residence on mortgage applications, potentially to obtain more favorable loan terms. Grand jury subpoenas have been issued in both Georgia and Michigan as part of the probe, which is being led by Special Assistant U.S. Attorney Ed Martin.

Governor Cook, who served as the first Black woman appointed to the Federal Reserve Board of Governors, was controversially dismissed by President Donald Trump after the referral surfaced. In response, she has filed a lawsuit challenging her removal, asserting that it was not only unlawful—since she claims no valid “cause” exists under federal law—but also politically motivated. The Federal Reserve Act stipulates that a governor may only be removed for cause, a safeguard designed to maintain the institution’s independence.

Her legal challenge is advancing through federal court, where she remains legally recognized as a member of the Board pending judicial resolution. The case underscores an extraordinary clash between the Federal Reserve’s independence and executive authority, with ramifications for the credibility of U.S. monetary policy.

The investigation and lawsuit unfold amid broader scrutiny of efforts to influence central bank leadership. Such actions raise fundamental questions about the role of political pressure in monetary decision-making—a concern echoed by economists and institutional observers who stress the importance of maintaining an independent Federal Reserve.