DOJ explores probe into Fed governor

The Justice Department signals a possible investigation into Federal Reserve Governor Lisa Cook and asks Fed Chair Jerome Powell to remove her from the board.

DOJ Urges Powell to Remove Cook as Probe Opens

The Justice Department has signaled it may open a formal inquiry into Federal Reserve Governor Lisa Cook and informed Fed Chair Jerome Powell that Cook’s status on the board could be affected. Ed Martin, a DOJ official who has led prior probes into figures such as Senator Adam Schiff and New York Attorney General Letitia James, wrote that Cook’s case 'requires further examination' in a letter sent Thursday.
Powell has not indicated any action against Cook, and a potential investigation would be handled within the legal process. The disclosure comes as the Fed faces its own challenges on price stability and the management of inflation. The move is unusual, drawing attention to how legal scrutiny could intersect with central bank governance and possibly influence public trust in the Fed.

The episode tests the independence of the Federal Reserve. A probe of a sitting governor carries political optics that could color policy discussions and create a chilling effect among other governors and staff. At the same time, due process and the presumption of innocence must guide any formal inquiry, lest the process look like a politicized toll booth rather than a careful review.
If the DOJ pursues a case, it could set a precedent that monetary policy and governance are subject to legal review, altering market expectations and potentially shifting the balance of power between branches of government. Such a shift would not just affect one person on a board but could influence how the public weighs the Fed’s decisions in times of inflation and crisis.

Highlights

The weeks ahead will test how the Fed preserves independence while facing scrutiny from prosecutors.