The Department of Justice will investigate Federal Reserve Governor Lisa Cook based on a criminal referral sent by a Trump administration housing official and arch critic of central bank chairman Jerome Powell, according to a letter obtained by CNBC’s Sara Eisen on Thursday.
The letter, addressed to Powell and signed by Justice Department attorney Ed Martin, urges the Fed chair to fire Cook from the board in light of the allegations that have been lodged against her.
“Do it today before it is too late!” Martin wrote.
But Powell does not have the authority to fire Cook: The Federal Reserve Act of 1913 states explicitly that board members can only be removed by the president.
Moreover, the Supreme Court suggested earlier this year that the president does not have the authority to arbitrarily remove Fed governors over policy disagreements.
The DOJ declined CNBC’s request for comment on the letter. The Fed did not immediately respond to a request for comment.
Martin noted in his letter that he received a criminal referral about Cook, and that she has responded that she is gathering evidence in preparation for her response to the allegations.
“It is a very troubling public interaction relating to her, I think you will agree,” Martin wrote.
“At this time, I encourage you to remove Ms. Cook from your Board,” he wrote. “Do it today before it is too late! After all, no American thinks it is appropriate that she serve during this time with a cloud hanging over her.”
Martin added, “As we begin any investigation of the conduct like that by Ms. Cook in the referral, I will likely be required for confidentiality purposes to remain silent about our investigations.”
“However, I will answer any questions you have to help you make a timely decision to remove her.”
Cook came under intense pressure to leave her post on Wednesday morning, after Federal Housing Finance Agency Director Bill Pulte publicly accused her of possible mortgage fraud and urged the DOJ to launch a criminal probe.
Pulte has been an aggressive opponent of Powell, whose reluctance to lower interest rates has stoked a barrage of criticism from Trump.
Trump previously entertained the possibility of firing Powell before his term expires next May, but he has backed off those threats. The Wall Street Journal reported Wednesday that Trump has told aides that he is now considering firing Cook.
Cook, who was nominated by former President Joe Biden in 2022, voted with the majority on the Federal Open Market Committee to keep rates unchanged after the group’s latest meeting last month.
Pulte’s central allegation is that Cook claimed two different properties as her primary residence at the same time.
“You cannot do that in America,” he said on CNBC on Wednesday afternoon.
Trump declared in a social media post Wednesday morning that Cook “must resign, now!!!”
But Cook said Wednesday that she has “no intention of being bullied to step down from my position because of some questions raised in a tweet.”
“I learned from the media that FHFA Director William Pulte posted on social media that he was making a criminal referral based on a mortgage application from four years ago, before I joined the Federal Reserve,” Cook said in a statement.
“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,” she said.
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— CNBC’s Sara Eisen contributed to this report.
