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President Donald Trump has called for the resignation of a key policymaker at the Federal Reserve over allegations that she made false claims on a mortgage application.
Economist Lisa Cook is one of the 12 voting members on the committee that sets Fed interest rate policy, a subject that has preoccupied Trump and his allies in recent months as they have sought quick reductions to interest rates.
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.
(Getty Images/ Tom Williams / Contributor)
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.
Soon after Pulte’s posts, Trump called for Cook to step down.
“Cook must resign, now!!!” he wrote on his Truth Social site.
“I have no intention of being bullied to step down from my position because of some questions raised in a tweet,” Cook said in a statement to Bloomberg.
“I do intend to take any questions about my financial history seriously as a member of the Federal Reserve and so I am gathering the accurate information to answer any legitimate questions and provide the facts.”
Cook did not immediately respond to a request for comment from Realtor.com® on Wednesday afternoon.
Tensions rise ahead of Powell’s Jackson Hole speech
The public threat of criminal prosecution for Cook marked the latest front in the war Trump and his allies have been waging to secure lower rates from the Fed.
After months of defying administration pressure to cut rates, Fed Chair Jerome Powell will deliver a major speech in Jackson Hole, WY, next month that could set the tone for rate decisions in September and beyond.
Fearful of lingering inflation, Powell and the other members of the Federal Open Market Committee have held the Fed’s benchmark rate steady at a range of 4.25% to 4.5% since December.
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.
Trump, who promised much lower mortgage rates during his campaign, has for months demanded dramatic cuts to the Fed’s policy rate, at various points threatening to fire or sue Powell in his attempts to pressure the central bank to cut rates.
Pulte, the director of the Federal Housing Finance Agency and the chairman of Fannie Mae and Freddie Mac, has emerged as Trump’s attack dog in the administration’s quest for lower rates.
In recent months, Pulte has called for a congressional investigation into Powell and launched bombastic social media attacks against the Fed chair, calling for his firing and fanning rumors that an ouster was imminent.
The criminal allegations against Cook open up a new front in the pressure campaign. Appointed by President Joe Biden in 2022, Cook was one of the eight FOMC members who backed Powell in holding rates steady at the latest policy meeting last month.
Meanwhile, Fed Govs. Michelle Bowman and Christopher Waller dissented, voting for a quarter-point rate cut, marking the first time since 1993 that more than one FOMC member has diverged from the consensus.
On Wednesday afternoon, minutes from that FOMC meeting were released to the public, showing how opinions diverged on the panel when it came to weighing the dual risks of inflation and a recession in the labor market.
“Participants generally pointed to risks to both sides of the Committee’s dual mandate, emphasizing upside risk to inflation and downside risk to employment,” the minutes noted. While “a majority of participants judged the upside risk to inflation as the greater of these two risks,” a couple saw “downside risk to employment the more salient risk.”
Recent economic data showing a massive downward revision to recent employment numbers may change that equation, showing that the labor market is weaker than previously thought.
But inflation has also flashed troubling signs, with core CPI jumping back above 3% in July, and wholesale inflation making the biggest monthly gain in three years.
Powell’s keynote address at the Fed’s annual conference in Jackson Hole will mark his swan song at the August symposium before his term expires in May.
The Fed chair is expected to unveil a new five-year policy framework for the Fed that could have implications that last long beyond his term.
In comments about the new framework, Powell has hinted that the Fed aims to set its neutral rate higher than in the past, to leave itself breathing room to respond to economic slowdowns without becoming stuck near zero and stoking runaway inflation.
“We may be entering a period of more frequent and potentially more persistent supply shocks, a difficult challenge for the economy and for central banks,” he said in May. “While our policy rate is currently well above the lower bound, in recent decades, we have cut the rate by about 500 basis points when the economy is in recession.”
The current Fed rate is less than 500 basis points above zero, and Powell’s comments suggested that policymakers were grappling with the challenge of leaving room to respond to a recession.