Federal Reserve Gov. Lisa Cook, one of the 12 officials who decide interest rate policy at the central bank, has said she will not leave office after President Donald Trump announced her firing over allegations of mortgage fraud.
The extraordinary showdown over monetary policy kicked off on Monday night, when Trump posted a letter to Cook on his Truth Social site stating that he was removing her from her post “effective immediately.”
“I will not resign,” Cook responded in a statement. “I will continue to carry out my duties to help the American economy as I have been doing since 2022.”
Cook insisted that Trump had “no authority” to fire her and attorney, Abbe David Lowell, added “ we will take whatever actions are needed to prevent this attempted illegal action.”
The tense showdown follows months of pressure from the Trump administration on Fed Chair Jerome Powell and his fellow policymakers to lower interest rates, which would juice the economy and reduce borrowing costs for the government.
Fed Gov. Lisa Cook (right) is seen with Chair Jerome Powell when she was appointed to the Board of Governors of the Federal Reserve in 2022
Trump has also accused Powell of “hurting the Housing Industry, very badly” by refusing to lower the Fed’s benchmark rate so far this year, adding that “people can’t get a Mortgage because of him.”
Although a Fed rate cut next month is now widely expected, Fed policymakers have kept their benchmark interest rate steady at a range of 4.25% to 4.5% since December in a bid to tamp down lingering inflation.
Mortgage rates have remained in the upper-6% range since then, adding to affordability challenges in the housing market and weighing heavily on home sales. While the Fed doesn’t set mortgage rates directly, expectations about future Fed policy can influence them.
“It is important to remember the Fed sets short-term rates, not long-term rates,” says Realtor.com Senior Economist Jake Krimmel. “So cuts to the Fed’s policy rate do not necessarily pass through into 30-year mortgage rates, which more closely track 10-year Treasury yields set by financial markets.”
Krimmel noted that price movement in the bond market following Trump’s move to fire Cook showed rising inflation expectations as long-term yields rose, a trend that will put upward pressure on mortgage rates.
“The financial markets are likely to see the erosion or outright elimination of Fed independence as an inflationary force, not a stabilizing one,” he says. “If this pattern holds, that could mean higher mortgage rates for borrowers in the future, not lower rates.”
Trump ally levels fraud charge at Cook
On Wednesday morning, Trump-appointed housing regulator Bill Pulte publicly accused Cook of lying on a mortgage application in 2021, alleging that she falsely claimed an Atlanta condo as her primary residence but went on to rent out the property.
“How can this woman be in charge of interest rates if she is allegedly lying to help her own interest rates?” Pulte wrote in a post on X.
Pulte also shared a copy of a letter he wrote to Attorney General Pam Bondi recommending a criminal investigation into Cook on suspicion of falsifying bank documents and committing mortgage fraud.
The letter alleged that in summer 2021, Cook purchased a Michigan home and a condo in Atlanta within a few weeks of each other, and affirmed in mortgage documents for each property that it would be her primary residence for at least a year.
Pulte further alleged that the Atlanta condo was listed as available for rent just two months after Cook purchased it, negating her claim on the mortgage application that it would be her primary residence.
Mortgage rates for primary residences are typically lower than those for second homes or investment properties. Making false statements on a mortgage application, including about the borrower’s finances or the nature of the property that secures the loan, can be prosecuted as a federal crime.
However, Cook has not been criminally charged in the matter, much less convicted. The fraud alleged by Pulte dates to before she became a Fed governor in 2022.
Developing story, more to follow.