Fed Governor Cook sues President Trump after attempted firing

Federal Reserve Governor Lisa Cook is suing President Donald Trump in response to his attempt to remove her from the Federal Reserve Board of Governors, setting up a legal battle that will have implications for the independence of the Federal Reserve. President Trump fired Gov. Cook following allegations of mortgage fraud leveled by Federal Housing Finance Agency Director Bill Pulte. The Federal Reserve issued a statement just prior to the suit being filed noting that Gov. Cook would “seek a judicial decision that would confirm her ability to continue to fulfill her responsibilities as a Senate-confirmed member of the Board of Governors of the Federal Reserve System. As always, the Federal Reserve will abide by any court decision.”

Governors serve 14-year terms and under the Federal Reserve Act, the President is only permitted to remove a Fed official “for cause.” What constitutes “cause” is not spelled out in the statute. The initial allegations against Cook state that she claimed two separate properties as her principal residence, which were mortgaged two weeks apart. Director Pulte has sent two criminal referrals to the Justice Department on the matter, including one this week regarding a third property. To date, Cook has not been charged by the Justice Department, and her suit argues that the abrupt firing violates rights to due process. 

The move comes after weeks of President Trump and other administration officials taking aim at the Fed and Chairman Powell and is part of a broader effort to reshape the Federal Reserve. “It is clear from the circumstances surrounding Governor Cook’s purported removal from the Federal Reserve Board that the mortgage allegations against her are pretextual, in order to effectuate her prompt removal and vacate a seat for President Trump to fill and forward his agenda to undermine the independence of the Federal Reserve,” Cook’s attorneys wrote.

Cook was appointed by President Biden and confirmed by the Senate in May 2022 to fill an unexpired term ending January 31, 2024. She was reappointed on September 8, 2023, to a full-term ending January 31, 2038. The first Black woman to serve on the Board, she previously held positions at the U.S. Treasury and on President Obama’s Council of Economic Advisors.

On Friday, Senate Banking, Housing, and Urban Affairs Committee Ranking Member Elizabeth Warren (D-Mass.) led all Democratic members of the committee in a letter to Chairman Scott urging the postponement of consideration of all Federal Reserve nominees in light of the administration’s recent attempts to restructure the Federal Reserve, specifically citing the President’s attempted firing of Governor Lisa Cook. The letter asks for the postponement of the committee’s upcoming hearing this Thursday on the nomination of White House economic advisor Stephen Miran to the Federal Reserve Board of Governors. While Miran was nominated to fill the vacancy created by Governor Adriana Kugler’s resignation, the President said they might instead appoint him to the vacancy left by Cook if her firing is permitted, which would allow him to serve a longer term.

Deputy Secretary Faulkender departs Treasury

Less than five months since being confirmed by the Senate, Treasury Deputy Secretary Michael Faulkender is departing the administration. No reason for the departure has been given. As Deputy Secretary, he worked on a broad portfolio of issues including financial regulation, tax, sanctions, and international finance. He also briefly served as IRS commissioner. He was confirmed by the Senate by a 53-43 vote along party lines.

"Since January, he has played a critical role in overseeing the U.S. Department of the Treasury's operations and executing on President Trump's bold economic agenda,” said Treasury Secretary Scott Bessent in a statement about Faulkender’s exit. “His important work has supported the passage of the historic One Big Beautiful Bill and GENIUS Act, and the leveling of sanctions against our adversaries."

Secretary Turner, Sen. Crapo visit Idaho Opportunity Zone

U.S. Housing and Urban Development (HUD) Secretary Scott Turner joined Senator Mike Crapo (R-Idaho) in Idaho for a roundtable with state and city housing leaders and to tour the state’s first completed Opportunity Zone (OZ) project. The visit also highlighted the impact of the One Big Beautiful Bill Act.

During the roundtable in Boise, Turner and Crapo met with local officials and housing and industry leaders to discuss the state and city’s housing challenges and needs. At this meeting, Senator Crapo also shared preliminary details from his 2025 housing survey. Over 5,000 of his constituents responded to the survey which found three overarching areas of concern: ongoing affordability issues, housing supply not keeping up with demand, and contrasting pressures on renters and homeowners.

“The overwhelming participation of Idahoans in this survey is indicative of the widespread concern about housing affordability in Idaho,” said Senator Crapo. “Ongoing affordability issues, such as wages not keeping up with costs; low housing supply not keeping up with demand; and market pressures, like high interest rates, are among the most pressing concerns Idahoans reflected in their responses. While Idahoans share many frustrations, the survey further highlighted differences in specific challenges and desired solutions--reflecting a vital need for a careful, targeted and collaborative policy approach.”

Pulte reduces Board seats of FHLBanks

Federal Housing Finance Agency (FHFA) Director Bull Pulte issued an order designating new board structures for the Federal Home Loan Banks (FHLBanks) that will go into effect in 2026. The move will reduce board of director seats at 9 of the 11 FHLBanks, with the steepest cuts in New York (19 current directors), Chicago (17 current directors), and San Francisco (13 current directors) which will all have four seats eliminated. Atlanta, which has 14 board members, and Des Moines, which has 22 board members, are unaffected.

The Boards of the FHLBanks oversee strategic business and risk management decisions and select the CEOs of their respective Banks. According to statute, the boards shall have “13 directors, or such other number as the [FHFA] Director determines appropriate.” A 2016 FHFA rule set minimums for certain states, and statute requires at least one member director for each state in the FHLBank’s region. Directors are elected by members to serve four-year terms not exceeding three consecutive terms. The move is the latest in a series by Pulte as he assists the Trump administration with restructuring agencies.

In a statement, the Council of Federal Home Loan Banks noted, “Each year, FHFA issues an order designating directorships for each FHLBank for the following year which can impact a FHLBank’s board size and composition. In its 2025 order, the agency adjusted the board size for nine of the 11 FHLBanks that were not already at the statutory minimum. The FHLBanks are working to comply with the order from FHFA."

FHFA greenlights Fannie and Freddie approval of Rocket’s acquisition of Mr. Cooper

FHFA announced that it will allow Fannie Mae and Freddie Mac (the Enterprises) to approve Rocket Companies’ proposed $9.4 billion acquisition of Mr. Cooper Group, with safety and soundness guardrails. FHFA specifically recommended that both Enterprises have strict counterparty concentration risk limits of 20 percent and impose other “appropriate” financial and operating safeguards.

The release stated, “No market participant should have greater than 20% of Fannie or Freddie’s servicing market in order to ensure the safety and soundness of the mortgage market and the overall economy.” In a July 2024 presentation, Fannie Mae noted that in addition to other factors, it considers portfolio concentration as part of its financial eligibility monitoring of its seller/servicer counterparties and maintains counterparty limits as part of its internal controls.

While neither FHFA, Fannie Mae, nor Freddie Mac have formal authority to approve Rocket’s overall acquisition of Mr. Cooper; as conservator, FHFA decides whether and under what conditions Fannie Mae and Freddie Mac may maintain counterparty relationships after a change in ownership. Fannie Mae and Freddie Mac review the proposed acquisition or merger to determine if they can continue to do business with a company following an acquisition or merger. FHFA conducted an analysis of the deal as part of its review and greenlit the Enterprises’ approval, recommending the 20 percent counterparty concentration cap of Fannie Mae and Freddie Mac’s respective servicing portfolios.

Based on 2024 data, Rocket is the second largest mortgage lender in the U.S., and Mr. Cooper is the largest mortgage servicer of residential mortgage loans. The merger will consolidate a significant portion of origination and servicing in the Enterprises portfolios. According to Fannie Mae’s second quarter 10Q filing, as of June 30, 2025 and based on unpaid principal balance, Rocket serviced approximately 7% and Mr. Cooper serviced approximately 9% of Fannie Mae’s single-family guaranty book of business, excluding loans they service on behalf of other servicers. Including subservicing, Mr. Cooper’s share of Fannie Mae’s portfolio increases to 16%. Freddie has not disclosed the specific share for either company, but reporting states that the combined concentration of the two companies’ Fannie Mae and Freddie Mac MBS outstanding is 15.1% and 14.1% respectively, but exceeds 20% if subservicing is included.

FHFA doubles Fannie Mae and Freddie Mac’s LIHTC investment caps

On August 5, FHFA announced it would allow Fannie Mae and Freddie Mac (the Enterprises) to double their Low-Income Housing Tax Credit (LIHTC) investments from $1 billion to $2 billion each. Of the combined $4 billion that the Enterprises can invest in LIHTC each year, half must be reserved for difficult-to-serve LIHTC markets of which 20% will be Duty to Serve Rural Communities. The move builds on the recent expansion of LIHTC in the One Big Beautiful Bill Act, which establishes a permanent 12% increase in the allocation for the 9% Housing Credit and reduces the bond financing threshold from 50% to 25, which could finance an additional 1.22 million rental homes over 2026-2035.

“Director Pulte’s decision is the right move at the right time. As we increase the allocation of housing tax credits in the One Big Beautiful Bill, it’s important that we also ensure that the market will absorb the additional credits without diminishing their value,” said David M. Dworkin, President and CEO of the National Housing Conference. “Having Fannie Mae and Freddie Mac increase their purchases will help increase demand for the credits, thereby creating even more units of affordable housing than would otherwise be the case.”

Leaders from across the housing industry and advocacy sectors welcomed the news including the Affordable Housing Tax Credit Coalition, the National Association of Home Builders, and the National Low Income Housing Coalition, to name a few.

CFPB moves to limit nonbank supervision with new “risk to consumers” definition

The Consumer Financial Protection Bureau (CFPB) issued a proposed rule that would reshape its supervisory authority over nonbank mortgage lenders and other financial firms. The proposed rule establishes a new definition of “risks to consumers” under Sec. 1024(a)(1)(C) of the Consumer Financial Protection Act of 2010, a provision which allows the CFPB to bring nonbanks under direct supervision.

The approach has historically been ad hoc, based on orders and case by case determinations rather than a formal rule. Under the proposed rule, the CFPB would only designate nonbanks if their conduct presents a high likelihood of significant harm to consumers and is directly connected to the offering or provision of a consumer financial product or service. Comments on the proposal are due by September 25.

HUD’s Innovative Housing Showcase returning to National Mall

HUD’s Innovative Housing Showcase will return to the National Mall from September 6-9. The annual event raises awareness of innovative and affordable housing designs and technologies that have the potential to increase housing supply, reduce barriers to construction, and build for stability, all while reducing housing expenses. This year’s theme, "The American Home is the American Dream," will focus on “history-defining events in housing, the pride of achieving the American Dream of homeownership, and the future of housing innovation.” The event is open to the public.

“I am thrilled to welcome back the Innovative Housing Showcase to the National Mall as we commemorate 250 years of American independence. During this special celebration we will remember through the decades, the American Dream of homeownership ties generations together and is a core part of our nation’s excellence,” said HUD Secretary Turner. “In accordance with President Trump’s inspirational vision for Salute to America 250, HUD is proud to highlight housing solutions that honor our past while building a strong, bright future for American homeownership. I look forward to seeing the talented exhibitors in Washington and presenting what I know will be a remarkable showcase to the American people.”