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The independence of the Federal Reserve has always been more of a gentleman’s agreement than an ironclad rule. President Donald Trump decided to test that in August 2025, and the legal fight that followed is still playing out in the courts.
At the center of it: three mortgage loans tied to properties in Michigan, Georgia, and Massachusetts, all obtained by Federal Reserve Governor Lisa Cook before her appointment to the Board of Governors.
How three mortgages became a constitutional flashpoint
On August 15, 2025, Federal Housing Finance Agency Director Bill Pulte issued a criminal referral alleging Cook had misrepresented how she intended to use the properties, specifically whether each would serve as a primary residence, to secure more favorable loan terms in 2021.
Primary residence loans typically carry lower interest rates and smaller down payment requirements than investment property loans. In English: if you tell a lender you’re moving in when you’re not, that’s fraud.
Ten days later, on August 25, 2025, Trump announced Cook’s firing, making it the first time a sitting president had ever attempted to remove a Federal Reserve governor. Cook denied any wrongdoing and immediately challenged the firing in court.
Cook was appointed by President Biden in 2022 and is the first Black woman to serve on the Fed Board of Governors.
US District Judge Jia Cobb issued a preliminary injunction in September 2025, allowing Cook to remain in office while litigation proceeded.
On June 29, 2026, the Supreme Court ruled 5-4 in Cook’s favor, blocking her removal while the full legal case continues. The ruling does not permanently settle the question of whether a president can fire a Fed governor for cause. It simply means Cook stays put for now.
The legal argument Trump is making
The Federal Reserve Act allows removal of a governor only “for cause.” That phrase has never been precisely defined by a court, which is exactly why this case matters.
Trump’s legal team argued that alleged mortgage fraud, even if it predated Cook’s appointment, constitutes sufficient cause. Cook’s legal team countered that the allegations are unsupported and that the removal attempt is a thinly veiled effort to install a more rate-friendly Fed board.
Major media investigations surfaced inconsistencies in the allegations that have complicated the government’s case. The criminal referral from Pulte has not, as of the most recent reporting, resulted in criminal charges against Cook.
Cook’s legal and security costs related to the case have exceeded $1.3 million.
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English (US) · 