Amid scrutiny from both President Trump and Federal Housing Finance Agency (FHFA) Director Bill Pulte over mortgage fraud allegations, Federal Reserve Governor Lisa Cook is receiving support from a contingent of nearly 600 economists in a letter voicing support and emphasizing the importance of protecting the Federal Reserve from political pressure.
“We write as economists to express our strong support for Federal Reserve Board Governor Lisa Cook and for the longstanding principle of central bank independence,” said the letter. “Good economic policy requires credible monetary institutions. Credible monetary institutions, in turn, require the independence of the Federal Reserve. A large body of research confirms that countries with more independent central banks achieve better economic outcomes.”
Among the approximate 600 authors of the letter, organized by Tatyana Deryugina, an Associate Finance Professor at the University of Illinois at Urbana-Champaign, are Nobel laureate Joseph Stiglitz and former Chair of the Council of Economic Advisers Jared Bernstein.
In late August, FHFA Director Pulte accused Cook of mortgage fraud after designating a Michigan home and an Atlanta condominium as her primary residences on loan applications, potentially securing more favorable terms.
“U.S. Federal Housing FHFA, alleges in a Criminal Referral to the Department of Justice that Federal Reserve Governor, Lisa D. Cook, committed mortgage fraud by designating her out of state condo as her primary residence, just two weeks after taking a loan on her Michigan home where she also declared it as her primary residence,” posted the FHFA Director on X. “When someone commits mortgage fraud, they undermine the faith and integrity of our System. It does not matter who you are—no one is above the law. We have sent a Criminal Referral to the Department of Justice with regard to the allegations against Ms. Cook, and the DOJ should go wherever the facts may lead them.”
Pulte continued by posting a series of images and documents on X regarding Cook’s Michigan residence and another described as an “Atlanta condo.”
Nearly a week later, President Trump dismissed Governor Cook from her role with the Fed over the mortgage fraud allegations.
In a letter dated August 25 to his Truth Social account to Cook, President Trump posted: “Pursuant to my authority under Article II of the Constitution of the United States and Federal Reserve Act of 1913, as amended, you are hereby removed from your position on the Board of Governors of the Federal Reserve, effective immediately. The Federal Reserve Act provides that you may be removed, at my discretion, for cause, See 12 U.S.C. 242. I have determined that there is sufficient cause to remove you from your position.”
Days later, Governor Cook filed a lawsuit claiming President Trump lacked the authority to remove her from her position. In the suit, filed in federal court in Washington, D.C., Cook claims Trump violated a federal law allowing him to remove a Fed governor only “for cause.”
According to Yahoo News, Cook also filed a motion seeking a temporary restraining order declaring that Trump’s efforts to fire her are unlawful, and bars the Fed from taking steps to remove her pending further litigation.
“This case challenges President Trump’s unprecedented and illegal attempt to remove Governor Cook from her position which, if allowed to occur, would the first of its kind in the Board’s history,” wrote Cook’s legal team from Lowell & Associates in the suit. “It would subvert the Federal Reserve Act (FRA), which explicitly requires a showing of ‘cause’ for a Governor’s removal, which an unsubstantiated allegation about private mortgage applications submitted by Governor Cook prior to her Senate confirmation is not.”
Despite the charges, the letter from the contingent of economists contends that through the Federal Reserve Act, Governors serve fixed terms and may be removed only “for cause,” a high bar meant to protect the institution’s independence.
“That protection is not merely a legal formality; it is a practical mechanism, designed to ensure that monetary policy cannot be misused for political gain at the expense of what’s best for the economy,” continued the letter.
Section 10 of the Federal Reserve Act of 1913 states that a President can only dismiss a Federal Reserve Governor “for cause.”
President Trump has been at odds with Federal Reserve Chair Jerome Powell for refusing to slash the fed funds rate, going as far as pushing for an investigation into a proposed $2.5 billion renovation to the Federal Reserve headquarters. According to the New York Post, the projected renovations by the Fed have risen by 30% from an original estimate of $1.9 billion.
“Recent public statements about Governor Cook—including threats of removal and a claim that she has been fired—have arrived alongside unproven accusations,” the group of economists penned in their letter. “This approach threatens the fundamental principle of central bank independence and undermines trust in one of America’s most important institutions.”
Cook’s term on the Federal Reserve Board runs through January 2038.
Click here to read the full letter supporting Fed Reserve Governor Lisa Cook.
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