Donald Trump’s justice department has opened a criminal investigation into a Federal Reserve governor over claims of mortgage fraud.
The department of justice has begun issuing subpoenas as it examines whether Lisa Cook submitted fraudulent information on mortgage applications, according to the Wall Street Journal. Ms Cook has denied the charges.
It comes as Mr Trump tries to force Ms Cook out of the Fed as part of efforts to exert control over the central bank.
The investigation follows two criminal referrals from Bill Pulte, the director of the US federal housing finance agency (FHFA), who has accused Ms Cook of falsifying documents to claim that two properties were her primary residence.
The case has echoes of the crisis that has engulfed Angela Rayner, Britain’s Deputy Prime Minister, who is being investigated by the ministerial ethics watchdog for failing to pay a £40,000 tax bill on her seaside holiday home.
That case also centres on whether Ms Rayner properly declared her primary residence. There is no suggestion of criminal wrongdoing in Ms Rayner’s case.
Meanwhile, Ms Cook, who was appointed to the board of governors by President Joe Biden in 2022, is fighting for her position amid escalating tensions between Mr Trump and Fed.
Mr Trump has repeatedly clashed with Jay Powell, whom he appointed as Federal Reserve chairman in his first term, over his decision not to lower interest rates this year – although the president has now turned his attention to Ms Cook.
He sent her a letter at the end of August telling her that she was removed from her role on the Federal Reserve Board “effective immediately”.
In response, Ms Cook filed a lawsuit arguing that Mr Trump’s attempt to sack her was unlawful and that the president had “concocted” a reason to get rid of her as part of his “agenda to undermine the independence of the Federal Reserve”.
In court filings, Ms Cook’s lawyers said she “did not ever commit mortgage fraud.”
Ms Cook has made a request for an emergency order to stop her from being removed from the Fed board while the case continues.
Trump seeking lower rates
If Mr Trump is able to oust her, it will free up another seat on the board for him to potentially appoint an ally who also wants to lower interest rates.
He has spent months making aggressive demands for the Fed to cut rates, which has been reluctant to do so amid fears that the president’s trade war will increase inflation.
Mr Trump has called Mr Powell a “numbskull” and suggested that he could also oust him over fraud, sparking fears over the Fed’s political independence.
This has prompted speculation over who the president will pick to replace Mr Powell once his term expires in May.
Earlier this summer, governor Adriana Kugler announced she would step down early, opening up a seat on the board that Mr Trump can use to install the new Fed chairman-in-waiting.
Mr Trump has nominated Stephen Miran, the chairman of his council of economic advisers (CEA), to fill the role temporarily for the remaining four months of Ms Kugler’s term.
Speaking at his nomination hearing for his position on the board, Mr Miran insisted that he considered the Fed’s independence as “of critical importance”.
However, he also said that he did not intend to resign from his role as CEA chair but would instead take a period of unpaid leave of absence while he served on the Fed board.
Democratic senator Jack Reed, of the banking committee, said that this would be “ridiculous” and meant that Mr Miran’s independence “has already been seriously compromised”.
As well as targeting the Federal Reserve, Mr Trump has also carried out a string of high-profile sackings across other government organisations.
At the start of August, he removed the head of the Bureau of Labour Statistics, Erika McEntarfer, after claiming poor jobs figures were “rigged” against him.
Last week, the Trump administration also forcibly removed Susan Monarez as the head of the centre for disease control and prevention, after she refused to resign under pressure.
Ms Cook was contacted for comment. The Department of Justice said it does not comment on current or prospective litigation.