Lisa Cook suggests clerical error may explain mortgage application issue

Fed Governor Lisa Cook Sues to Block Trump’s Removal Attempt

Federal Reserve Governor Lisa Cook is fighting to keep her seat, arguing that a clerical mistake—not fraud—is being weaponized by President Donald Trump as grounds to remove her.

Cook filed a lawsuit this week in federal court, directly challenging Trump’s legal authority to oust her from the Fed Board of Governors. The case focuses less on whether she filled out a mortgage form incorrectly and more on whether the president has the power to remove her at all under the Federal Reserve Act.

Her legal team argues that even if she made an error, it does not rise to the standard of “cause,” the only justification the statute allows for dismissing a sitting governor. That phrase is not clearly defined in law and could ultimately be interpreted by the Supreme Court. Cook maintains the accusations are merely a pretext for Trump to reshape the Fed with allies more willing to support interest-rate cuts.

Lisa’s lawyers say Trump lacks authority

The complaint calls the mortgage fraud claims “pretextual” and emphasizes that they relate to conduct allegedly predating Cook’s Senate confirmation. It further notes that no federal agency has ever investigated or proven the allegations.

“This allegation about conduct that predates Governor Cook’s Senate confirmation has never been investigated, much less proven,” her attorneys wrote. “This allegation is not grounds for removal under the [Federal Reserve Act].”

Trump, joined by Federal Housing Finance Agency director Bill Pulte, has accused Cook of misrepresenting her residence on mortgage applications. But Cook’s lawyer, Abbe Lowell, said that even if the claim were true, it would not qualify as lawful grounds for dismissal.

“Even if the President had been more careful in obscuring his real justification for targeting Governor Cook,” Lowell wrote, “the President’s concocted basis for removal, the unsubstantiated and unproven allegation that Governor Cook ‘potentially’ erred in filling out a mortgage form prior to her Senate confirmation, does not amount to ‘cause’ within the meaning of the FRA and is unsupported by caselaw.”

Her legal team also stressed that neither Trump nor Pulte alleged Cook benefited financially or acted intentionally. “Even if Governor Cook had committed the infractions that the President alleges, which she did not, the President would lack ‘cause’ to remove her,” the filing added.

Critics question silence as markets stay calm

Pulte responded in a statement to CNBC’s Scott Wapner, noting that Cook had not denied the mortgage documents were hers. “So one has to wonder why she, or [Fed Chair] Jerome Powell, would want this to be a part of the Federal Reserve, which is supposed to have preeminent integrity and which is critical to the safety and soundness of the U.S. Mortgage Market,” he said.

So far, financial markets have shrugged off the controversy, but analysts warn that may not last. Krishna Guha, head of global policy research at Evercore ISI, called the case a distraction from what he described as the “Trumpification” of the Fed. “We have no privileged knowledge of the legal facts,” Guha wrote, “but believe if it were established Cook committed even accidental mortgage misrepresentation, she would have to go.”

If Trump succeeds in removing Cook and the Senate confirms his nominee Stephen Miran to an open seat, the president would gain a 4–3 majority on the Board. That could shift to 5–2 if Chair Jerome Powell decides not to finish his term as governor once his chairmanship ends in May 2026.