Lisa Cook, a member of Federal Reserve Board, faces new scrutiny over accusations of mortgage fraud. Former President Donald Trump has joined calls for her ouster from the board. The hot button issue is about to get hotter! There have been recent claims that Cook illegally claimed properties in Ann Arbor, Michigan, and Atlanta as her primary residences. Trump’s attempts to derail Cook were met with powerful legal pushback. So far, courts have ruled in her favor, letting her remain in the home while her lawsuit runs its course.
Scott Bessent, an up and coming star investor here, is in the same boat. In September of 2007, he entered six mortgages. He changed his filings to declare his properties in Bedford Hills, New York and Provincetown, Massachusetts, as his primary residences. Still, according to his representatives, Bank of America knew these homes were second homes and nowhere near the primary home state. The similarities between Bessent’s and Cook’s cases have garnered widespread attention, but experts warn that the two are not the same.
The fight started when Trump tried to fire Cook over allegations of mortgage fraud. Cook has refuted these allegations and filed a lawsuit to prevent her firing from the Federal Reserve. A U.S. District Court judge in Washington, D.C., upheld the ruling against Trump’s efforts to fire Cook. That decision was upheld by a federal appeals court even as her lawsuit continues.
Bessent’s mortgage contracts were executed on behalf of Bessent by his lawyer, Charles Rich. Rich testified that Bessent gave him authority through a Power of Attorney for the deals. On behalf of the SEC’s Office of Investor Education and Advocacy, he reassured that nothing was wrong with Bessent’s loan applications.
“There was absolutely nothing improper about Mr. Bessent’s loan applications with which he was minimally involved as he had delegated authority to me as his lawyer and an agent to close these loan transactions.” – Charles Rich
Cook’s mortgage agreements are noteworthy especially in their timing. She signed all three within two weeks of each other in the summer of 2021 just before her June 2022 appointment to the Federal Reserve Board. This new piece of information calls into question her motives for the properties that she listed with the owned primary home status.
Bessent’s new mortgage pledges have raised eyebrows. His story is very similar to Cook’s, as both men were charged with making allegedly false statements on their mortgages. Differences exist: while both of Bessent’s mortgages were with Bank of America, Cook’s agreements were with two different banks.
“Bank of America was fully aware that the Provincetown, MA property was not a principal residence and waived any requirement that it be used as a principal residence.” – Charles Rich
While the drama on Capitol Hill continues to unfold, Bessent raises alarms about Trump’s likely impact on the Federal Reserve. He reassured that most see Trump as pushing too much on the independence of the Fed.
“There are people who think that President Trump is putting undue pressure on the Fed.” – Scott Bessent
Cook and Bessent maintain their innocence. Despite all of this, they are doubling down, even as their mortgage business comes under intense scrutiny, allegations and lawsuits. The results of their respective predicaments will indubitably have long-standing repercussions for the Federal Reserve and its central leadership.
“And there are people like President Trump and myself who think that if a Fed official committed mortgage fraud, that this should be examined, and that they shouldn’t be serving as one of the nation’s leading financial regulators.” – Scott Bessent
Despite the swirling allegations and legal challenges, both Cook and Bessent continue to assert their innocence regarding any wrongdoing in their mortgage dealings. The outcomes of their respective situations will likely have lasting implications for the Federal Reserve and its leadership.