Undermining Trust in the Fed Could Create 'Chaos,' Says Kitty Richards

Kitty Richards, senior fellow at the Groundwork Collaborative, reacts to efforts by President Trump and FHFA director Bill Pulte's efforts criticism of the Fed and breaks down why efforts to sway Fed policy could have unintended impact on the wider economy.

President Donald Trump called on Federal Reserve Governor Lisa Cook to resign after a staunch ally called for an investigation of the board member’s mortgages, intensifying his campaign on the central bank.

Federal Housing Finance Agency Director Bill Pulte urged Attorney General Pam Bondi to investigate Cook over a pair of mortgages, the latest in a series of moves by the Trump administration to increase legal scrutiny of Democratic figures and appointees. Cook was nominated to the Fed by former President Joe Biden.

Trump said Wednesday that Cook “must resign now,” citing Pulte’s allegations, while the FHFA head posted on social media that the accusations give Trump “cause to fire” her.

Pulte wrote a letter to Bondi and Justice Department official Ed Martin on Aug. 15 suggesting that Cook may have committed a criminal offense. The letter, which was first reported by Bloomberg News, alleges that Cook “falsified bank documents and property records to acquire more favorable loan terms, potentially committing mortgage fraud under the criminal statute.” The Justice Department has received the letter, according to an official, who declined to elaborate further.

A resignation would create another opening for Trump to fill on the Fed board, potentially tipping the balance of Republican appointees to four of its seven members. The president has explicitly said that he’ll only pick a successor to Fed Chair Jerome Powell who agrees that borrowing costs should come down, a demand that has already raised questions about whether a new chair can credibly preserve the bank’s independence.

Trump’s administration has also pursued mortgage fraud allegations against high-profile Democrats, including California Senator Adam Schiff and New York Attorney General Letitia James. Both are longtime political foes of Trump.

The Cook referral expands that effort to the Fed, as Trump allies — including Pulte — press the US central bank to lower rates and Powell to resign before his term as chair expires in May.

No charges have been filed and it’s not clear whether Bondi will investigate. The Justice Department declined comment. The Federal Reserve declined comment. Cook did not respond to requests for comment late Tuesday.

Pulte said Cook took a mortgage on a property in Ann Arbor, Michigan, signing an agreement that stipulated she would use the property as her primary residence for at least a year. Two weeks later, according to the letter, she took another mortgage on a Georgia property and also declared it would be her primary residence.

Pulte also called on Bondi to look into whether Cook misrepresented her circumstances by later listing the Georgia property for rental. The letter includes copies of mortgage documents in Cook’s name, as well as an apparent rental listing from 2022, a little over a year after she bought the Georgia property.

In an interview Wednesday on CNBC, Pulte said the referral to the Justice Department was based on publicly available information.

“You know, anybody can go look at these public documents,” Pulte said. “So you know, there’s no funny business there.”

Powell Pressure

Trump has put substantial pressure on Powell and the Fed to lower rates, tarnishing the chairman as “Too Late” in social media posts arguing the Fed should have started slashing rates months ago, while also heavily criticizing Powell and the Fed over its ongoing headquarters renovation project.

The documents in the referral show that Cook took a $203,000, 15-year mortgage on an Ann Arbor property in 2021. The document included a stipulation that she “shall occupy, establish and use the Property as Borrower’s principal residence within 60 days” and “for at least one year,” unless the lender, the University of Michigan Credit Union, agreed in writing.

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