The Department of Justice will investigate Federal Reserve Governor Lisa Cook based mostly on a prison referral despatched by a Trump administration housing official and arch critic of central financial institution chairman Jerome Powell, in accordance with a letter obtained by CNBC’s Sara Eisen on Thursday.
The letter, addressed to Powell and signed by Justice Department legal professional Ed Martin, urges the Fed chair to fireside Cook from the board in mild of the allegations which were lodged towards her.
“Do it today before it is too late!” Martin wrote.
But Powell doesn’t have the authority to fireside Cook: The Federal Reserve Act of 1913 states explicitly that board members can solely be eliminated by the president.
Moreover, the Supreme Court suggested earlier this 12 months that the president doesn’t have the authority to arbitrarily take away Fed governors over coverage disagreements.
The DOJ declined CNBC’s request for touch upon the letter. The Fed didn’t instantly reply to a request for remark.
Cook got here beneath intense strain to depart her submit on Wednesday morning, after Federal Housing Finance Agency Director Bill Pulte accused her of doable mortgage fraud and urged the DOJ to launch a prison probe.
Pulte has been an aggressive opponent of Powell, whose reluctance to decrease rates of interest has stoked a barrage of criticism from Trump.
Trump beforehand entertained the potential for firing Powell earlier than his time period expires subsequent May, however he has backed off these threats. The Wall Street Journal reported Wednesday that Trump has instructed aides that he’s now contemplating firing Cook.
Cook, who was nominated by former President Joe Biden in 2022, voted with the bulk on the Federal Open Market Committee to maintain charges unchanged after the group’s newest assembly final month.
Pulte’s central allegation is that Cook claimed two completely different properties as her major residence on the similar time.
“You cannot do that in America,” he stated on CNBC on Wednesday afternoon.
Trump declared in a social media submit Wednesday morning that Cook “must resign, now!!!“
But Cook stated 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 stated in a press release.
“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 stated.
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— CNBC’s Sara Eisen contributed to this report.