Justice Department opens probe into Fed governor's mortgage declarations

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(The Center Square) – The Justice Department is investigating embattled Federal Reserve governor Lisa Cook after a top administration official accused the Biden appointee of mortgage fraud.

The Justice Department issued subpoenas as part of an investigation into whether Cook submitted fraudulent information on mortgage applications. The investigation focuses on properties in Ann Arbor, Mich., and Atlanta, Ga. 

The investigation follows two criminal referrals from Bill Pulte, President Donald Trump's director of the Federal Housing Finance Agency.

Pulte publicly alleged that Cook engaged in mortgage fraud, and Trump cited those allegations in his letter firing Cook. 

Cook owns properties in both Georgia and Michigan, but had separately indicated both as her "primary residence" on different mortgage agreements, Pulte said. More recently, Pulte accused Cook of irregularities related to a third mortgage.

Cook has denied wrongdoing and filed suit to try to stop Trump from firing her.

"The questions over how Governor Cook described her properties from time to time, which we have started to address in the pending case and will continue to do so, are not fraud, but it takes nothing for this DOJ to undertake a new politicized investigation, and they appear to have just done it again," Cook attorney Abbe Lowell said in a statement Thursday.

Trump is fighting back in court and has said he has "cause" to fire Cook.

"Incredibly, Dr. Cook even now hazards no explanation for her conduct and points to nothing she would say or prove in any 'hearing' that would conceivably alter the President's determination that the perception of financial misconduct alone is intolerable in this role," Assistant Attorney General Brett Shumate wrote in a motion in opposition. "Under these circumstances, there is certainly no equitable basis for a reinstatement injunction."

Lowell has said the Federal Reserve's independence is at issue.

"The operational independence of the Federal Reserve is vital to its ability to make sound economic decisions, free from the political pressures of an election cycle," Lowell wrote in the suit.

The Wall Street Journal first reported on the subpoenas Thursday, citing officials close to the investigation. Several additional media outlets confirmed that reporting.

The Justice Department investigation comes as Trump continues to pressure the Federal Reserve to lower key interest rates. 

Cook's suit names Federal Reserve Chair Jerome Powell and the board of governors as defendants.

Trump has said the U.S. should have the lowest rates in the world, but the Federal Open Market Committee has taken a wait-and-see approach on rates over concerns about how Trump's tariffs would affect the economy.

More recently, Powell hinted that the Fed may lower interest rates at its next meeting.

Earlier this year, the U.S. Supreme Court indicated it might treat the Federal Reserve differently than other independent agencies.

The nation's highest court said the president and the Federal Reserve's relationship differed from other independent agencies.

"The Federal Reserve is a uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States," the high court wrote in an emergency ruling in May.