The Department of Justice’s special attorney for mortgage fraud, Ed Martin, is opening a criminal probe into a Federal Reserve governor, Lisa Cook. Mr. Martin is already investigating New York’s attorney general, Letitia James, and Senator Adam Schiff of California regarding similar allegations. 

In a letter sent on Thursday to the Federal Reserve chairman, Jerome Powell, Mr. Martin stated that Ms. Cook’s case “requires further examination” and urged him to remove Ms. Cook from the board “before it’s too late,” according to Bloomberg. “After all, no American believes it is appropriate for her to serve during this time with a cloud hanging over her,” Mr. Martin wrote.

He informed the Fed chairman that “as we begin any investigation into conduct like that by Ms. Cook in the referral, I will likely be required for confidentiality purposes to remain silent about our investigations.” However, he added, “I will answer any questions you have to help you make a timely decision to remove her.”

Mr. Martin, a former interim U.S. attorney for the District of Columbia, leads the “Weaponization Working Group,” a DOJ division established by Attorney General Pam Bondi to investigate actions taken against President Trump that may have been motivated by “political objectives or other improper aims.” He is also the DOJ pardon attorney. In addition, Ms. Bondi has assigned him the role of investigating mortgage fraud, hence his focus on Ms. Cook, Ms. James, and Mr. Schiff.

Ms. Cook, a Biden appointee, came under scrutiny on Wednesday when the Federal Housing Finance Agency director, Bill Pulte, called on Ms. Bondi to investigate her for allegedly falsifying bank documents and property records to secure favorable loan terms.

Mr. Pulte, an heir to the Pulte Homes fortune, was also behind the criminal referrals of Ms. James and Mr. Schiff to Main Justice. He accuses Ms. Cook of improperly designating two homes as her primary residence to obtain lower mortgage rates. He claims that the Fed board member stated in a June 2021 mortgage agreement for an Ann Arbor, Michigan, property that the home would serve as her primary residence for at least one year. Two weeks later, he alleges, she purchased a condominium at Atlanta that she also claimed would be her primary residence for a year.

The allegations prompted Mr. Trump to publicly call on Ms. Cook to “resign now” on Wednesday morning. Behind the scenes, he is investigating whether he can fire her, according to the Wall Street Journal.

Ms. Cook addressed the controversy on Wednesday night, stating through a Fed representative that she has “no intention of being bullied into stepping down from my position because of some questions raised in a tweet.” She emphasized that she takes “any questions about my financial history seriously” and is “gathering the accurate information to answer any legitimate questions and provide the facts.”

Ms. Cook is the first black woman to sit on the Fed’s powerful board that sets interest rates and is widely considered its most liberal member. The Berkeley Ph.D. was confirmed in 2023 by a 51-50 vote of the Senate after Vice President Kamala Harris broke the tie. Republicans had accused Ms. Cook of being a left-wing extremist who supports reparations. She is in the second year of a 14-year term.

Ousting Ms. Cook would significantly shift the Federal Reserve’s composition, giving Mr. Trump the opportunity to appoint a new governor and tip the balance toward Republican appointees — creating a 4-3 majority among the Fed’s board members. All board members hold voting rights on the Federal Open Market Committee, the 12-person body that sets interest rates, alongside five regional Federal Reserve Bank presidents.

For months, Mr. Trump has been railing against the board’s chairman, Mr. Powell, for not lowering interest rates. On Tuesday on Truth Social, he called Mr. Powell “Too Late,” an epithet the president now frequently uses to demean the board chairman. Mr. Trump has said he probably won’t fire Mr. Powell, whose term ends in May, but he’s steadily ratcheting up the pressure, including embarrassing Mr. Powell about the high cost of renovations to the Fed’s D.C. headquarters by personally visiting the site.

The controversy unfolds as markets await potential signals about September rate cuts from Mr. Powell, who will deliver his economic outlook Friday at the Jackson Hole symposium in Wyoming.