NORFOLK, Va. — New York Atty. Gen. Letitia James is set to make her first court appearance in a mortgage fraud case on Friday, the third adversary of President Trump to face a judge on federal charges in recent weeks.
James was indicted earlier this month on charges of bank fraud and making false statements to a financial institution in connection with a 2020 home purchase in Norfolk, Va. The charges came shortly after the official who had been overseeing the investigation was pushed out by the Trump administration and the Republican president publicly called on the Justice Department to take action against James and other political foes.
James, a Democrat who has sued Trump and his administration dozens of times, has denied wrongdoing and decried the indictment as “nothing more than a continuation of the president’s desperate weaponization of our justice system.”
The indictment stems from James’ purchase of a modest house in Norfolk, where she has family. During the sale, she signed a standard document called a “second home rider” in which she agreed to keep the property primarily for her “personal use and enjoyment for at least one year,” unless the lender agreed otherwise.
Rather than using the home as a second residence, the indictment alleges, James rented it out to a family of three. According to the indictment, the misrepresentation allowed James to obtain favorable loan terms not available for investment properties.
James drew Trump’s ire when she won a staggering judgment against the president and his companies in a lawsuit alleging he defrauded banks by overstating the value of his real estate holdings on financial statements. An appeals court overturned the fine, which had ballooned to more than $500 million with interest, but upheld a lower court’s finding that Trump had committed fraud.
James’ indictment followed the resignation of Erik Siebert as U.S. attorney for the Eastern District of Virginia after he resisted Trump administration pressure to bring charges. Siebert was replaced with Lindsey Halligan, a White House aide and former Trump lawyer who had never previously served as a federal prosecutor and presented James’ case to the grand jury herself.
On Thursday, lawyers for James asked for an order prohibiting prosecutors from disclosing to the news media information about the investigation, or materials from the case, outside of court.
The motion followed the revelation from earlier this week that Halligan contacted via an encrypted text messaging platform a reporter from Lawfare, a media organization that covers legal and national security issues, to discuss the James prosecution and complain about coverage of it. The reporter published the exchange that she and Halligan had.
“The exchange was a stunning disclosure of internal government information,” lawyers for James wrote.
They added: “It has been reported that Ms. Halligan has no prosecutorial experience whatsoever. But all federal prosecutors are required to know and follow the rules governing their conduct from their first day on the job, and so any lack of experience cannot excuse their violation.”
The motion also asks that the government be required to preserve all communications with representatives of the media as well as to prevent the deletion of any records or communications related to the investigation and the prosecution of the case.
Separately on Thursday, defense lawyers said they intended to challenge Halligan’s appointment, a step also taken this week by attorneys for former FBI Director James Comey in a different case filed by Halligan. Comey has been charged with lying to Congress in a criminal case filed days after Trump appeared to urge his attorney general to prosecute him, and he has pleaded not guilty.
A third Trump adversary, former national security adviser John Bolton, pleaded not guilty last week to charges against him of emailing classified information to family members and keeping top secret documents at his Maryland home.
The Justice Department has also been investigating mortgage fraud allegations against Democratic Sen. Adam Schiff of California, whom Trump has called to be prosecuted over allegations related to a property in Maryland. In a separate mortgage investigation, authorities have been probing allegations against Federal Reserve Board member Lisa Cook, who is challenging a Trump administration effort to remove her from her job. Schiff and Cook have denied wrongdoing.
Finely and Richer write for the Associated Press. Richer reported from Washington. Associated Press reporter Eric Tucker in Washington contributed to this report.
Oct. 24 (UPI) — New York Attorney General Letitia James will be arraigned Friday for her charges of lying on a mortgage application, a prosecution pushed by President Donald Trump.
James’ arraignment will be in Norfolk, Va., in the first court appearance since her indictment on Oct. 9. A grand jury in the U.S.District Court of Eastern Virginia indicted James on the criminal charges after the Justice Department alleged she falsely claimed a Norfolk, Va., property that she bought in 2020 would be her primary residence to get better mortgage terms.
James is expected to plead not guilty to one count of bank fraud and one count of making a false statement to a financial institution.
James is accused of lying about the purpose of a house purchase in Norfolk in 2020. She said on the mortgage application that it would be her primary home, but instead made it a rental. She allegedly rented it to a family of three. But her great-niece has lived in the home since 2020 and testified to a grand jury that she has never paid rent. James has only reported $1,350 in rent on her taxes.
Career federal prosecutors decided against prosecuting James, but Trump forced out Erik Siebert, the U.S. attorney overseeing the office, and replaced him with Lindsey Halligan, a White House aide. Halligan brought the case against James and got the indictment.
Trump dislikes James because she filed a civil fraud lawsuit in 2022, accusing Trump of giving false property valuations and estimates of Trump’s net worth in order to get beneficial loan rates and insurance deals he wouldn’t otherwise have gotten. Trump lost the case and was ordered to pay $364 million. A judge later overturned the fine for being excessive.
Halligan made headlines on Tuesday for her messages to a reporter who wrote an article about the case in the New York Times. Halligan allegedly harassed reporter Anna Bower on Signal for 33 hours.
James’ attorney, Abbe Lowell, asked the court to intervene and warn Halligan about making extra-judicial comments about the case.
“These extrajudicial statements and prejudicial disclosures by any prosecutor, let alone one purporting to be the U.S. attorney, run afoul of and violate the federal rules of criminal procedure, the code of federal regulations, this court’s local rules, various rules of ethical and professional responsibility and [Department of Justice’s] justice manual,” Lowell wrote in a filing, The Times reported. He wanted the judge to warn Halligan “to prevent any further disclosures by government attorneys and agents of investigative and case materials, and statements to the media and public.”
Sept. 20 (UPI) — The acting U.S. attorney for the Eastern District of Virginia was forced out after failing to bring criminal charges against New York Attorney General Letitia James regarding mortgage loan fraud.
Erik Siebert notified staff on Friday that he resigned, but President Donald Trump said he was fired. Siebert was nominated for the position and was awaiting Senate confirmation.
On Saturday, Attorney General Pam Bondi appointed Mary “Maggie” Cleary, an attorney active in Republican politics, as acting U.S. attorney for the division, according an internal email obtained by Politico and The Washington Post.
This month, Cleary rejoined the DOJ as a senior counsel in the criminal division in the District of Columbia after working in the Culpepper Commonwealth’s Attorney’s Office and Virginia state agencies.
She was placed on administrative leave in the DOJ’s Virginia Western District for being on Capitol grounds during the riot on Jan. 6, 2021. Clear said she was “framed” and was ultimately cleared.
“This evening, I submitted my resignation as interim US Attorney for EDVA,” Siebert’s email, obtained by ABC News, read. “For the last eight months, I have had the pleasure of leading the finest and most exceptional of DOJ employees, who care deeply about our nation and our EDVA community. Thank you for the lessons you have taught me, the sacrifices you have made, and the pursuit of justice you strive for every day.”
On Saturday, Trump posted on X that he “withdrew the Nomination of Erik Siebert as U.S. Attorney for the Eastern District of Virginia, when I was informed that he received the UNUSUALLY STRONG support of the two absolutely terrible, sleazebag Democrat Senators, from the Great State of Virginia. He didn’t quit, I fired him! Next time let him go in as a Democrat, not a Republican.”
In a joint statement, Kaine and Warner said Siebert lost his job because his office was “unable to find incriminating evidence of mortgage fraud” against James, noting that there had been bipartisan support for his nomination.
“In April, after an extensive interview process that included the input of a bipartisan panel of former Virginia U.S. attorneys and other well-respected members of the Virginia legal community, Warner and Kaine sent a letter to the White House recommending Siebert for the U.S. attorney position,” they wrote. “In May, the White House announced that Siebert was formally nominated for the role,” Warner and Kaine said.
Both senators from a nominee’s state are sent a blue slip in which they may submit a favorable or unfavorable opinion of a nominee, regardless of their party. The Senate Judiciary Committee takes blue slips into consideration when deciding whether to recommend that the Senate confirm a nominee.
Media outlets, including CNN and The New York Times, reported that Justice Department prosecutors in Virginia believed they have not gathered enough evidence to indict James.
“Erik Siebert is an ethical prosecutor who refused to bring criminal charges against Trump’s perceived enemies when the facts wouldn’t support it,” the senators wrote. “The Eastern District of Virginia is at the forefront of significant cases essential to our national security, and just like any court in America, should be focused on justice instead of a thin-skinned president’s vendettas.”
Siebert, who worked for 15 years in Virginia as an assistant U.S. attorney, was the lead attorney for the Organized Crime Drug Enforcement Task Force and the deputy criminal supervisor for the Richmond Division.
He was also a police officer with the Metropolitan Police Department in Washington, D.C.
In March, he appeared with Attorney General Pam Bondi, Republican Virginia Gov. Glenn Youngkin and FBI Director Kash Patel on the arrest of an alleged MS-13 gang member in Northern Virginia.
Before posting on Truth Social, Trump told reporters, “Yeah, I want him out. When I learned that they voted for him, I said, I don’t really want him.”
New York’s attorney general is among three people targeted by the Trump administration for alleged loan fraud involving claims about two primary residences in Virginia and New York. No Republicans have been named, though Labor Secretary Lori Chavez-DeRemer, Transportation Secretary Sean Duffy and EPA Administrator Lee Zeldin have two primary residences on loan paper, ProPublica reported.
William Pulte, director of the Federal Housing Finance Agency, wrote a letter to Bondi alleging that James had “in multiple instances, falsified bank documents and property records to acquire government-backed assistance and loans and more favorable loan terms.” The letter was obtained by CBS News.
“The allegations are baseless,” James told NY1, “The allegations are nothing more than a revenge tour.”
James has been in Trump’s crosshairs since June 2022, when she sued Trump and the Trump Organization, alleging they inflated the values of properties.
Trump was ordered to pay $355 million in restitution for “ill-gotten gains” from his inflated financial statements, state Superior Court Judge Arthur Engoron ruled. With interest, the amount was raised to $527 earlier this year. But the Appellare Division in New York earlier this year canceled the fine and James has appealed.
Pulte has also targeted California Sen. Adam Schiff, a Democrat, and Federal Reserve Governor Lisa Cook, appointed by President Joe Biden. Trump fired Cook, but the district and appeals courts have ruled that Trump doesn’t have the authority to fire someone from the Federal Reserve without due process and only for cause. Trump has asked the Supreme Court to weigh in.
The report comes as the White House pushes to fire fed governor Lisa Cook for a similar reason.
Published On 17 Sep 202517 Sep 2025
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United States Treasury Secretary Scott Bessent agreed to occupy two different houses at the same time as his “principal residence”, an agreement similar to the one US President Donald Trump has called mortgage fraud in his effort to fire Fed Governor Lisa Cook.
The story, first reported by the Bloomberg news service on Wednesday, cites Bessent’s mortgages with lender Bank of America and his pledge in 2007 to primarily occupy homes in New York and Massachusetts.
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Mortgage experts told Bloomberg there was no sign of wrongdoing or proof of fraud in Bessent’s home-loan filings and said the issue highlights incongruities found in such documents.
Bank of America did not rely on Bessent’s pledges and never expected him to occupy both homes as his primary residences, Bloomberg reported, citing the mortgage documents.
Representatives for Bessent did not immediately respond to a request for comment.
The Republican president, who appointed Bessent to the Treasury post, and members of his administration have accused Cook, an appointee of Democratic former President Joe Biden, of committing mortgage fraud, a claim Cook denies.
The White House did not respond to Al Jazeera’s request for comment.
Comparable to Cook
Congress included provisions in the 1913 law that created the Fed to shield the central bank from political interference. Under that law, Fed governors may be removed by a president only “for cause”, though the law does not define the term nor establish procedures for removal. No president has ever removed a Fed governor, and the law has never been tested in court.
Trump has sought to remove Cook for cause, citing the alleged fraud. A US appeals court on Monday declined to allow Trump to fire her. The White House has said it will appeal the decision to the US Supreme Court.
Trump’s Department of Justice also has launched a criminal mortgage fraud probe into Cook, issuing grand jury subpoenas in Georgia and Michigan, the news agency Reuters previously reported.
A loan estimate for an Atlanta home bought by Cook showed that she had declared the property as a “vacation home”, according to a document reviewed by Reuters. The property tax authority in Ann Arbor, Michigan, also said Cook had not broken rules for tax breaks on a home there that had been declared her primary residence.
Bloomberg, in its report on Wednesday, pointed to similar but not identical pledges made by a lawyer on Bessent’s behalf on September 20, 2007, agreeing to make a Bedford Hills, New York, house his “principal residence” over the next year, as well as another house in Provincetown, Massachusetts.
“There are people who think that President Trump is putting undue pressure on the Fed. 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,” Bessent told Fox Business Network in an August 27 interview.
Bessent is not the only one. Close relatives of Bill Pulte – who was appointed by Trump as director of the Federal Housing Finance Agency and is the official who has accused Cook of mortgage fraud – have declared the same status on two homes in two different states, public records show.
Mark and Julie Pulte, the father and stepmother have claimed so-called “homestead exemptions” for residences in wealthy neighbourhoods in both Michigan and Florida, Reuters reported earlier, citing public records.
The exemption is meant to give a discount to homeowners on taxes for properties they use as their primary residence.
HOUSEHOLDS across the country are being warned to brace for a financial squeeze as the cost of government borrowing skyrockets to levels not seen since 1998.
This now directly threatens to push up mortgage rates and could usher in a new wave of tax hikes.
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The rise in government borrowing costs is putting serious pressure on household budgets in two key waysCredit: Getty
The pound has tumbled in response to the growing unease, highlighting investor concern over the UK’s economic stability.
At the heart of the issue are government bonds, known as “gilts,” which the government issues to borrow money.
These bonds offer investors a return, referred to as the “yield.”
In recent weeks, gilt yields have been rising rapidly, making it more expensive for the government to borrow.
This morning, yields soared further, with 30-year gilts reaching 5.72% – the highest level in nearly 30 years – while 10-year gilts climbed to 4.85%.
This spike signals that investors are nervous.
They are demanding a higher return to lend to the UK, worried about stubborn inflation and a gaping £51billion hole in the nation’s finances.
The rise in government borrowing costs is putting serious pressure on household budgets in two key ways
Firstly, it’s driving up mortgage rates.
The link between government gilt yields and mortgage rates is direct and unavoidable.
Lenders use “swap rates,” which closely track gilt yields, to set the prices of fixed-rate mortgage deals.
As these rates climb, fixed mortgages become more expensive.
Since August 1, two-year swaps have risen from 3.56% to 3.74%, while five-year swaps have gone from 3.63% to 3.83%.
Major lenders like Barclays have already started increasing rates, and even a small rise can add significantly to monthly payments on a typical £200,000 mortgage.
With swap rates continuing to rise in recent weeks, experts warn that mortgage rates are likely to increase further.
Separately, Chancellor Rachel Reeves faces a difficult challenge in her Autumn Budget, scheduled for November.
Higher borrowing costs are eating into public funds, and many economists believe tax increases will be necessary to fill the financial gap.
Although the government has promised not to raise income tax, national insurance, or VAT for “working people,” other tax measures are reportedly being considered.
One proposal is applying National Insurance to rental income, which critics fear could result in landlords passing on the cost to tenants through higher rents.
Another idea being debated is replacing stamp duty with an annual property tax, which could affect homeowners.
There are also rumours of reducing pension tax relief or cutting the tax-free lump sum, moves that could generate billions but might hurt savers.
Plus, there’s speculation about lowering the VAT threshold, which would bring more small businesses into the tax system.
This could increase their costs and potentially lead to higher prices for consumers.
Reeves is expected to make economic growth the centrepiece of her next Budget, warning that Britain’s economy is “stuck” and in need of bold solutions.
What can you do about it?
None of the proposed changes have been confirmed yet, and the government hasn’t ruled them out either.
However, any new measures won’t take effect until after the Budget in November.
It’s important not to make rash decisions based on speculation.
If changes are announced, you’ll have time to act and protect your finances before they come into effect.
For instance, if stamp duty is replaced by an annual property tax from a certain date, you could move house before the deadline to avoid the extra cost.
Similarly, if the government introduces capital gains tax on high-value properties, you might consider downsizing to a smaller home before the change is implemented.
Rob Morgan, chief analyst at Charles Stanley, said: “Taking pre-emptive action can outright backfire.
“Last year some people were concerned about restrictions around taking tax free cash from pension and took withdrawals they wouldn’t have otherwise made.
“This removed the money from a tax-efficient environment and potentially stored up tax issues that will come back to haunt them.
“Instead, it’s best to wait to see what happens, consider the consequences, and take advice as required before acting.”
Most of the proposed measures are likely to affect only the very wealthy, so you may not be impacted at all.
If you’re concerned, there are steps you can take to prepare and safeguard your finances.
Check your financial health
If you are worried about your finances then you should speak to a financial adviser.
They will be able to offer you advice about your situation and explain if any of the measures will affect you.
You can find one using unbiased.co.uk – but remember, you will pay a fee.
It’s good practice to sit down and take stock of your finances every six months and work out a plan.
Work out all your bills and outgoings and what income you have and factor in any changes, such as bills going up or new income streams.
Think about what you need to do to make the most of your money. For example, do you need to prioritise paying off debts or saving for a house deposit.
If your mortgage deal is coming to an end soon, act now.
Locking in a fixed rate could shield you from rising rates and market uncertainty.
Aaron Strutt, of mortgage broker Trinity Financial, said “For the moment there have not been significant price hikes but it’s probably worth locking in a mortgage rate if you are buying somewhere or due to remortgage, to try and keep away from any market turbulence.”
If you are coming to the end of a fixed deal, most lenders let you lock in a new rate up to six months beforehand, which can be worth doing.
If rates fall after you agree a new deal, some lenders will let you sign a new one at a lower rate.
How to get the best deal on your mortgage
IF you’re looking for a traditional type of mortgage, getting the best rates depends entirely on what’s available at any given time.
If you’re remortgaging and your loan-to-value ratio (LTV) has changed, you’ll get access to better rates than before.
Your LTV will go down if your outstanding mortgage is lower and/or your home’s value is higher.
A change to your credit score or a better salary could also help you access better rates.
And if you’re nearing the end of a fixed deal soon it’s worth looking for new deals now.
You can lock in current deals sometimes up to six months before your current deal ends.
Leaving a fixed deal early will usually come with an early exit fee, so you want to avoid this extra cost.
But depending on the cost and how much you could save by switching versus sticking, it could be worth paying to leave the deal – but compare the costs first.
You can also go to a mortgage broker who can compare a much larger range of deals for you.
Some will charge an extra fee but there are plenty who give advice for free and get paid only on commission from the lender.
You’ll also need to factor in fees for the mortgage, though some have no fees at all.
You can add the fee – sometimes more than £1,000 – to the cost of the mortgage, but be aware that means you’ll pay interest on it and so will cost more in the long term.
The average bank customer has around £10,000 in savings, according to Raisin.
If that £10,000 is kept in an easy access account earning 1.5% interest, it would generate just £150 in interest each year.
But switching to Cahoot’s 5% easy access account would boost that to £500, earning you an extra £350.
If your savings account pays less than the current inflation rate of 3.8%, it’s time to look for a better deal.
How can I find the best savings rates?
WITH your current savings rates in mind, don’t waste time looking at individual banking sites to compare rates – it’ll take you an eternity.
Research price comparison websites such as Compare the Market, Go.Compare and MoneySupermarket.
These will help you save you time and show you the best rates available.
They also let you tailor your searches to an account type that suits you.
As a benchmark, you’ll want to consider any account that currently pays more interest than the current level of inflation – 3.4%.
It’s always wise to have some money stashed inside an easy-access savings account to ensure you have quick access to cash to deal with any emergencies like a boiler repair, for example.
If you’re saving for a long-term goal, then consider locking some of your savings inside a fixed bond, as these usually come with the highest savings rates.
Lisa Cook’s attorney, Abbe Lowell, denied that she ever committed mortgage fraud in a court filing on Tuesday. Photo by Jim Lo Scalzo/EPA
Sept. 3 (UPI) — Attorneys for Federal Reserve Governor Lisa Cook denied claims of wrongdoing made by the Trump administration as she seeks to block President Donald Trump‘s efforts to fire her.
In a civil action filed Tuesday, Cook’s attorney, Abe Lowell, denied claims made by U.S. Director of Federal Housing Bill Pulte that she committed mortgage fraud, which Trump presented as the reason for her firing, are untrue.
“Governor Cook did not ever commit mortgage fraud,” her attorneys wrote.
The action seeks to follow up on a suggestion made Friday by the courts to use a fast-tracked review to rule on the key issues of Cook’s case, which would cut through more routine routes and timelines.
The filing states that Cook’s team would agree to this, as long as Trump, who is a defendant along with Federal Reserve Chair Jerome Powell and the Fed Board of Governors, would agree to allow Cook to serve as Fed Board Governor until the expedited ruling is made.
Cook has served as a Federal Reserve Governor since 2022 but was fired by Trump following a criminal referral from a member of his administration that alleged Cook committed mortgage fraud.
She has not been charged with any related crime.
Trump fired her “for cause,” which is the only way a president can fire a Fed governor under the Federal Reserve Act.
The White House has since attempted to justify her firing under the past case Reagan vs. United States, which the administration interprets to have created precedent that when a president determines cause for termination exists, it’s unreviewable unless protected by specific removal statutes.
“But the Government ignores the facts, context, and reasoning of Reagan to advance this contorted reading,” the lawsuit suggests. “In reality, Reagan hurts the Government’s case more than it helps it.”
Cook’s attorneys explained the “Reagan” case helped define that as officers such as Federal Reserve Board governors serve fixed terms, they are entitled “to notice and a hearing, and ultimately judicial review” before being removed for cause.
As for Cook’s role as a Fed governor, she remains active until a court rules otherwise, despite Trump’s actions.
Meanwhile, Pulte, who was responsible for both the original and a second criminal referral against Cook, said he would hold a meeting with the press on Thursday.
Pulte has posted a wave of allegations against Cook since mid-August.
“Once you see what we present on Thursday, there’s going to be a lot of people apologizing and retracting their false and defamatory statements,” Pulte posted Tuesday in regard to those who have defended Cook and called the Trump administration’s action a political power move. “Watch.”
WASHINGTON — President Trump’s attempt to fire a member of the Federal Reserve’s governing board has raised alarms among economists and legal experts who see it as the biggest threat to the central bank’s independence in decades.
The consequences could affect most Americans’ everyday lives: Economists worry that if Trump gets what he wants — a loyal Fed that sharply cuts short-term interest rates — the result would likely be higher inflation and, over time, higher borrowing costs for things like mortgages, car loans and business loans.
Trump on Monday sought to fire Lisa Cook, the first Black woman appointed to the Fed’s seven-member Board of Governors. It was the first time in the Fed’s 112-year history that a president has tried to fire a governor.
Fed independence ‘hangs by a thread’
Trump and members of his administration have made no secret about their desire to exert more control over the Fed. Trump has repeatedly demanded that the central bank cut its key rate to as low as 1.3%, from its current level of 4.3%.
Before trying to fire Cook, Trump repeatedly attacked the Fed’s chair, Jerome Powell, for not cutting the short-term interest rate and threatened to fire him as well.
“We’ll have a majority very shortly, so that’ll be good,” Trump said Tuesday, a reference to the fact that if he is able to replace Cook, his appointees will control the Fed’s board by a 4-3 vote.
“The particular case of Governor Cook is not as important as what this latest move shows about the escalation in the assaults on the Fed,” said Jon Faust, an economist at Johns Hopkins and former advisor to Powell. “In my view, Fed independence really now hangs by a thread.”
Some economists do think the Fed should cut more quickly, though virtually none agrees with Trump that it should do so by 3 percentage points. Powell has signaled the Fed is likely to cut by a quarter point in September.
Why economists prefer independent central banks
The Fed wields extensive power over the U.S. economy. By cutting the short-term interest rate it controls — which it typically does when the economy falters — the Fed can make borrowing cheaper and encourage more spending, growth and hiring. When it raises the rate to combat the higher prices that come with inflation, it can weaken the economy and cause job losses.
Most economists have long preferred independent central banks because they can take unpopular steps that elected officials are more likely to avoid. Economic research has shown that nations with independent central banks typically have lower inflation over time.
Elected officials like Trump, however, have much greater incentives to push for lower interest rates, which make it easier for Americans to buy homes and cars and would boost the economy in the short run.
A political Fed could boost inflation
Douglas Elmendorf, an economist at Harvard and former director of the nonpartisan Congressional Budget Office, said that Trump’s demand for the Fed to cut its key rate by 3 percentage points would overstimulate the economy, lifting consumer demand above what the economy can produce and boosting inflation — similar to what happened during the COVID-19 pandemic emergency.
“If the Federal Reserve falls under control of the president, then we’ll end up with higher inflation in this country probably for years to come,” Elmendorf said.
And while the Fed controls a short-term rate, financial markets determine longer-term borrowing costs for mortgages and other loans. And if investors worry that inflation will stay high, they will demand higher yields on government bonds, pushing up borrowing costs across the economy.
In Turkey, for example, President Recep Tayyip Erdogan forced the central bank to keep interest rates low in the early 2020s, even as inflation spiked to 85%. In 2023, Erdogan allowed the central bank more independence, which has helped bring down inflation, but short-term interest rates rose to 50% to fight inflation, and are still 46%.
Other U.S. presidents have badgered the Fed. President Johnson harassed then-Fed Chair William McChesney Martin in the mid-1960s to keep rates low as Johnson ramped up government spending on the Vietnam War and antipoverty programs. And President Nixon pressured then-Chair Arthur Burns to avoid rate hikes in the run-up to the 1972 election. Both episodes are widely blamed for leading to the stubbornly high inflation of the 1960s and ‘70s.
Trump has also argued that the Fed should lower its rate to make it easier for the federal government to finance its tremendous $37-trillion debt load. Yet that threatens to distract the Fed from its congressional mandates of keeping inflation and unemployment low.
Independence vs. accountability
Presidents do have some influence over the Fed through their ability to appoint members of the board, subject to Senate approval. But the Fed was created to be insulated from short-term political pressures. Fed governors are appointed to staggered, 14-year terms to ensure that no single president can appoint too many.
Jane Manners, a law professor at Fordham University, said there is a reason that Congress decided to create independent agencies like the Fed: Lawmakers preferred “decisions that are made from a kind of objective, neutral vantage point grounded in expertise rather than decisions are that are wholly subject to political pressure.”
Yet some Trump administration officials say they want more democratic accountability at the Fed.
In an interview with USA Today, Vice President JD Vance said, “What people who are saying the president has no authority here are effectively saying is that seven economists and lawyers should be able to make an incredibly critical decision for the American people with no democratic input.”
Stephen Miran, a top White House economic advisor, wrote a paper last year advocating for a restructuring of the Fed, including making it much easier for a president to fire governors.
The “overall goal of this design is delivering the economic benefits” of an independent central bank, Miran wrote, “while maintaining a level of accountability that a democratic society must demand.” Trump has nominated Miran to the Fed’s board to replace Adriana Kugler, who stepped down unexpectedly Aug. 1.
There could be more turmoil ahead
Trump said he wants to oust Cook from the Board of Governors because of allegations raised by one of his advisors that she has committed mortgage fraud.
Cook has argued in a lawsuit seeking to block her firing that the claims are a pretext for Trump’s desire to assert more control over the Fed. A court may decide this week whether to temporarily block Cook’s firing while the case makes its way through the legal process.
Cook is accused of claiming two homes as primary residences in July 2021, before she joined the board, which could have led to a lower mortgage rate than if one had been classified as a second home or an investment property. She has suggested in her lawsuit that it may have been a clerical error but hasn’t directly responded to the accusations.
Trump also has personally insulted Powell for months, but his administration now appears much more focused on the Fed’s broader structure.
The Fed makes its interest rate decisions through a committee that consists of the seven governors, including Powell, as well as the 12 presidents of regional Fed banks in cities such as New York, Kansas City and Atlanta. Five of those presidents vote on rates at each meeting. The New York Fed president has a permanent vote, while four others vote on a rotating basis.
While the reserve banks’ boards choose their presidents, the Fed board in Washington can vote to reject them. All 12 presidents will need to be reappointed and approved by the board in February, which could become more contentious if the board votes down one or more of the 12 presidents.
Reappointing the reserve bank presidents and upending that structure would be “the nuclear scenario,” said Adam Posen, president of the Peterson Institute for International Economics.
That, he said, “would be the signal that things are truly going off the rails.”
WASHINGTON — When Bill Pulte was nominated as the country’s top housing regulator, he told senators that his “number one mission will be to strengthen and safeguard the housing finance system.”
But since he started the job, he’s distinguished himself by targeting President Trump ‘s political enemies. He’s using property records to make accusations of mortgage fraud and encourage criminal investigations, wielding an obscure position to serve as a presidential enforcer.
This week, Trump used allegations publicized by Pulte in an attempt to fire Lisa Cook, a member of the Federal Reserve board, as he tries to exert more control over the traditionally independent central bank.
Pulte claims that Cook designated two homes as her primary residence to get more favorable mortgage rates. Cook plans to fight her removal, laying the groundwork for a legal battle that could reshape a cornerstone institution in the American economy.
Trump said Tuesday that Cook “seems to have had an infraction, and you can’t have an infraction,” adding that he has “some very good people” in mind to replace her.
Pulte has cheered on the president’s campaign with a Trumpian flourish.
“Fraud will not be tolerated in President Trump’s housing market,” he wrote on social media. “Thank you for your attention to this matter.”
Pulte targets Democrats but not Republicans
Pulte, 37, is a housing industry scion whose official job is director of the Federal Housing Finance Agency. He oversees mortgage buyers Fannie Mae and Freddie Mac, which were placed in conservatorship during the Great Recession almost two decades ago.
Like other political appointees, he routinely lavishes praise on his boss.
“President Trump is the greatest,” he posted over the weekend.
Pulte has made additional allegations of mortgage fraud against Sen. Adam Schiff, one of Trump’s top antagonists on Capitol Hill, and New York Attorney General Letitia James, who filed lawsuits against Trump. Those cases are being pursued by Ed Martin, a Justice Department official.
“In a world where housing is too expensive, we do not need to subsidize housing for fraudsters by letting them get better rates than they deserve,” Pulte wrote on social media.
Pulte has ignored a similar case involving Ken Paxton, the Texas attorney general who is friendly with Trump and is running for Senate in his state’s Republican primary. Paxton took out mortgages on three properties that were all identified as his primary residence.
He also has mortgages on two other properties that explicitly prohibit him from renting the properties out, but both have been repeatedly listed for rent, according to real estate listings and posts on short-term rental sites.
Asked about Pulte’s investigations and Trump’s role in them, the White House said that anyone who violates the law should be held accountable.
“President Trump’s only retribution is success and historic achievements for the American people,” said Davis Ingle, White House spokesman.
It’s unclear whether Pulte is using government resources to develop the allegations he has made. Mortgage documents are generally public records, but they are typically maintained at the county level across most of the U.S., making them difficult to comprehensively review. However, Fannie Mae and Freddie Mac, which are both government-sponsored entities, purchase large tranches of mortgages from lenders, which could centralize much of that information, real estate and legal experts say.
FHFA did not respond to a detailed list of questions from the AP, including whether Pulte or his aides used government resources to conduct his research.
It’s not just mortgages
Pulte’s broadsides go beyond mortgages. He’s been backing Trump’s criticism of Jerome Powell, chair of the Federal Reserve, over expensive renovations at the central bank’s headquarters. Trump is pressuring Powell to cut interest rates in hopes of lowering borrowing costs, and his allies have highlighted cost overruns to suggest that Powell is untrustworthy or should be removed from his position.
“This guy is supposed to be the money manager for the world’s biggest economy, and it doesn’t even look like he can run a construction site,” Pulte said while wearing a neon safety vest outside the building. “So something doesn’t smell right here.”
Since returning to the White House, Trump has reached deep into the government to advance his agenda. He’s overhauled the federal workforce with the Office of Personnel Management, pushed ideological changes at the Smithsonian network of museums and fired the commissioner of the Bureau of Labor Statistics when he didn’t like a recent report on job numbers.
With Pulte in charge, the Federal Housing Finance Agency is becoming another instrument of Trump’s mission to exert control and retaliate against enemies.
It’s a contrast to the Internal Revenue Service, where Trump has unsuccessfully discussed ways to use tax policies as a pressure point. For example, during battles over higher education, Trump threatened to take away Harvard’s long-standing tax-exempt status by saying, “It’s what they deserve.”
However, there are more restrictions there, dating back to the Watergate scandal under President Richard Nixon.
“It’s been hard for the administration to use the inroads it wants to use to pursue its enemies,” said Vanessa Williamson, a senior fellow at the Urban-Brookings Tax Policy Center.
She said, “The law is very clear about taxpayer privacy and the criminal penalties at play are not small.”
Before going on the attack, Pulte played nice online
Pulte is heir to a home-building fortune amassed by his grandfather, also named William Pulte, who founded a construction company in Detroit in the 1950s that grew into the publicly traded national housing giant now known as the Pulte Group.
He spent four years on the company’s board, and he’s the owner of heating and air conditioning businesses across the U.S. He had never served in government before being nominated by Trump to lead the Federal Housing Finance Agency.
“While many children spent their weekends at sporting events, I spent mine on homebuilding jobsites with my father and grandfather,” Pulte said in written testimony for his nomination hearing. “From the ground up, I learned every aspect of housing — whether it was cleaning job sites, assisting in construction, or helping sell homes.”
He once tried to make a name for himself with good deeds, describing himself as the “Inventor of Twitter Philanthropy” and offering money to needy people online. He was working in private equity at the time, and he told the Detroit Free Press that he funded his donations with some “very good liquidity events” to power his donations.
Even six years ago, he appeared focused on getting attention from Trump.
“If @realDonaldTrump retweets this, my team and I will give Two Beautiful Cars to Two Beautiful Veterans on Twitter.”
Trump replied, “Thank you, Bill, say hello to our GREAT VETERANS!”
Pulte, whose most recent financial disclosure shows a net worth of at least $180 million, was also ramping up his political donations.
Over the past six years, he and his wife have donated over $1 million to the political efforts of Trump and his allies, including a $500,000 contribution to a super PAC affiliated with Trump that was the subject of a campaign finance complaint made with the Federal Election Commission.
The Pultes’ $500,000 contribution was made through a company they control named ML Organization LLC, records show. While such contributions are typically allowed from corporations, the same is not always true for some limited liability companies that have a limited business footprint and could be set up to obscure the donor.
The FEC ultimately exonerated the Pultes, but found in April that the Trump super PAC, Make America Great Again, Again! Inc., did not properly disclose that the Pultes were the source of the donation, said Saurav Ghosh, the Campaign Legal Center’s director of federal campaign finance reform.
Ghosh said the donation raises serious questions about Pulte’s appointment to lead FHFA.
“Why is Bill Pulte even in a government position?” he said. “Maybe he’s qualified, maybe he isn’t. But he did pour hundreds of thousands of dollars into a pro-Trump super PAC. And I think it’s clear there are these types of rewards for big donors across the Trump administration.”
Megerian, Slodysko and Hussein write for the Associated Press.
The US president says Lisa Cook to be removed from position ‘effective immediately’.
United President Donald Trump has ordered the removal of Federal Reserve governor Lisa Cook amid unproven claims of mortgage fraud.
In a letter posted on social media on Monday night, Trump said Cook was being sacked “effective immediately”, in accordance with his powers under the US Constitution and the 1913 Federal Reserve Act.
Citing allegations made last week by the US federal mortgage regulator, Trump said there was “sufficient reason to believe you may have made false statements on one or more mortgage agreements”.
“The Federal Reserve has tremendous responsibility for setting interest rates and regulating reserve and members banks,” Trump said in the letter, which was shared on his platform Truth Social.
“The American people must be able to have full confidence in the honesty of the members entrusted with setting policy and overseeing the Federal Reserve. In light of your deceitful and potentially criminal conduct in a financial matter, they cannot and I do not have such confidence in your integrity.”
Trump had on Friday threatened to fire Cook, who was appointed by former President Joe Biden, if she did not resign.
Trump’s extraordinary move is set to raise further questions about the independence of the US central bank, which has been under intense pressure from Trump to lower interest rates.
In a letter addressed to US Attorney General Pam Bondi and Department of Justice official Ed Martin earlier this month, Federal Housing Finance Agency director Bill Pulte, a staunch Trump ally, alleged that Cook had listed two properties as her primary home addresses.
The Federal Reserve did not immediately respond to Al Jazeera’s request for comment.
The resignation calls intensify Trump’s attempts to yield influence over the central bank.
United States President Donald Trump has called on Federal Reserve Governor Lisa Cook to resign, intensifying his effort to gain influence over the central bank on the basis of allegations made by one of his allies about mortgages Cook holds in Michigan and Georgia.
US Federal Housing Finance Agency Director Bill Pulte alleged in a post on X earlier on Wednesday that Cook had designated a condo in Atlanta as her primary residence after taking a loan on her home in Michigan, which she also declared as a primary residence.
Loans for a primary residence can carry easier terms than for second homes or investment properties. Pulte said the loans date to mid-2021, before Cook was appointed to the Fed by former President Joe Biden and confirmed by the Senate the following year. She is a native of Georgia and, at the time, was an economics professor at Michigan State University.
Pulte asked Attorney General Pam Bondi to investigate, and Trump quickly amplified the allegation. The Department of Justice was taking the matter very seriously, a department official told Reuters.
“We’re also probing some property that she has in Massachusetts to see if there’s something there. But I don’t have anything yet on that,” Pulte said in an interview on CNBC.
Cook’s federally filed financial disclosure documents show three mortgages taken out in 2021, including a 15-year 2.5 percent loan on an investment property and two loans for personal residences, including a 30-year 3.25 percent mortgage and a 15-year 2.875 percent mortgage. The weekly average rate for 30-year loans during 2021 ranged between 2.9 percent and 3.3 percent, Mortgage Bankers Association data shows. Cook started at the Fed in 2022 and was reappointed to a 14-year term in 2023.
Spokespersons for the Fed and for Cook did not immediately respond to a request for comment.
“Cook must resign, now!!!” Trump wrote in a post on his social media platform, his latest remarks aimed at reshaping the makeup of the US central bank, a body designed to set benchmark interest rates independent of White House influence.
Trump has told aides he is considering attempting to fire Cook, according to the Wall Street Journal, which cited a senior White House official and another person familiar with the matter.
White House at odds with the central bank
Cook is one of three Biden appointees to the Fed whose term extends beyond Trump’s time in office, complicating the president’s efforts to get more control by appointing a majority of its seven-member board.
Currently, two of the Fed’s remaining six board members were appointed by Trump: Governor Christopher Waller and Vice Chair for Supervision Michelle Bowman.
Trump has repeatedly blasted Fed Chair Jerome Powell over benchmark rates that he wants sharply reduced, calling for his resignation while acknowledging that the Fed’s unique status in US governance prevents him from firing Fed board members over monetary policy disputes.
Trump can name a new chair when Powell’s term ends in May, but claiming a majority on the board may take more time. Powell could continue serving as a governor until 2028, near the end of Trump’s term, should he buck convention and continue sitting on the board under a new chair.
Until Powell’s departure, Trump at this point has only one other seat to fill, vacated recently by the surprise resignation of former Governor Adriana Kugler. Earlier this month, Trump nominated Council of Economic Advisers Chairman Stephen Miran to serve out the rest of her term.
President Trump on Tuesday accused Sen. Adam Schiff (D-Calif.) of committing mortgage fraud by intentionally misleading lenders about his primary residence being in the suburbs of Washington, D.C., rather than California, in order to “get a cheaper mortgage and rip off America.”
Schiff, who led a House impeachment of Trump during the president’s first term and has remained one of his most vocal and forceful political adversaries since joining the Senate, dismissed the president’s claims as a “baseless attempt at political retribution.”
A spokesperson for Schiff said he has always been transparent about owning two homes, in part to be able to raise his children near him in Washington, and has always followed the law — and advice from House counsel — in arranging his mortgages.
In making his claims, Trump cited an investigation by the Fannie Mae “Financial Crimes Division” as his source.
A memorandum reviewed by The Times from Fannie Mae investigators to William J. Pulte, the Trump-appointed director of the U.S. Federal Housing Finance Agency, does not accuse Schiff of mortgage fraud. It noted that investigators had been asked by the FHFA inspector general’s office for loan files and “any related investigative or quality control documentation” for Schiff’s homes.
Investigators said they found that Schiff at various points identified both his home in Potomac, Md., and a Burbank unit he also owns as his primary residence. As a result, they concluded that Schiff and his wife, Eve, “engaged in a sustained pattern of possible occupancy misrepresentation” on their home loans between 2009 and 2020.
The investigators did not say they had concluded that a crime had been committed, nor did they mention the word “fraud” in the memo.
The memo was partially redacted to remove Schiff’s addresses and information about his wife. Fannie Mae did not respond to a request for comment.
In addition to denying any wrongdoing, Schiff also suggested that Trump’s accusation was an effort to distract from a growing controversy — important to many in the president’s MAGA base — over the administration’s failure to disclose more investigative records into child sex abuse by the late financier Jeffrey Epstein, a former acquaintance of Trump’s.
There has long been rumors of a “client list” of Epstein’s that could expose other powerful men as predators. Trump promised to release such a list as a candidate, and at one point Atty. Gen. Pam Bondi appeared to say such a list was on her desk. However, the administration has since said no such list exists, and Trump has begged his followers to move on.
Schiff drew a direct line between that controversy and Trump’s accusations against him Tuesday.
“This is just Donald Trump’s latest attempt at political retaliation against his perceived enemies. So it is not a surprise, only how weak this false allegation turns out to be,” Schiff wrote on X. “And much as Trump may hope, this smear will not distract from his Epstein files problem.”
A spokesperson for Schiff echoed the senator’s denial of any wrongdoing.
According to the spokesperson, Schiff made a decision routine for Congress members from states far from Washington to buy a home in Maryland so he could raise his children nearby. He also maintained a home in California, living there when not in Washington.
The spokesperson said all of Schiff’s lenders were aware that he intended to live in both as he traveled back and forth from Washington to his district — making neither a vacation home.
Trump’s own post about Schiff, on his social media platform, was thin on details and heavy on insults, calling Schiff “a scam artist” and “crook.”
Trump alleged that Schiff reported his primary residence being in Maryland, when “he must LIVE in CALIFORNIA” as a congressman from the state.
Schiff, a former federal prosecutor, has for years laid out detailed arguments against the president — and for why his actions violated the law and warranted his permanent removal from office. Those have included Trump’s first presidential campaign’s interactions with Russian assets, his pressuring Ukraine to investigate his rival Joe Biden while U.S. military aid was being withheld from the country, and his incitement of the Jan. 6, 2021, insurrection and storming of the U.S. Capitol to prevent the certification of Biden’s 2020 electoral win over him.
Schiff also has criticized the president — and his businesses, family members and political appointees — for their own financial actions.
He recently sponsored legislation that would restrict the ability of politicians and their family members from getting rich off of digital currencies of their own creation, as Trump and his family have done. He also has repeatedly demanded greater financial transparency from various Trump appointees, accusing them of breaking the law by not filing disclosures of their assets within required time frames.
Others have accused Trump for years of financial fraud. Last year, a judge in New York ordered Trump to pay $355 million in penalties in a civil fraud case after finding that the president and others in his business empire inflated his wealth to trick banks and insurers. Trump denied any wrongdoing and has appealed the decision.
All along the way, Trump has attacked Schiff personally, accusing him of peddling hoaxes for political gain and repeatedly suggesting that he should be charged with treason. During a presidential campaign stop in California last year — when Schiff was running for Senate — Trump called Schiff “one of the sleaziest politicians in history.”
Schiff made mention of Trump’s treason claims in his response to the new allegation of mortgage fraud Tuesday, writing, “Since I led his first impeachment, Trump has repeatedly called for me to be arrested for treason. So in a way, I guess this is a bit of a letdown.”
Before leaving office, President Biden preemptively pardoned Schiff and the other members of the committee that investigated Trump’s role in the Jan. 6 insurrection, anticipating that Trump would seek to retaliate against them for their work.
Schiff was first elected to the U.S. House of Representatives in 2000. He now splits his time between a two-story home in Potomac, Md., which he bought in 2003, according to property records, and a one-bedroom condo in a shopping area in downtown Burbank, which he bought in 2009.
In 2023, amid a bruising primary race for his Senate seat, CNN reported on Schiff’s two mortgages, citing experts who said the arrangement did not put Schiff in legal jeopardy — even if it could raise tough political questions.
CNN reported that deed records showed Schiff had designated his Maryland home as his primary residence, including while refinancing his mortgage over the years. In 2020, the outlet reported, Schiff again refinanced his mortgage and indicated that the Maryland home was his second.
CNN also reported that Schiff for years has taken a California homeowner’s tax exemption for his Burbank home, also designating it as his primary address. CNN said that exemption amounted to “roughly $70 in annual savings.” Schiff’s spokesperson confirmed that estimate in annual savings in California, and noted that Schiff did not claim such an exemption in Maryland.
June 18 (UPI) — The Mortgage Bankers Association reported that May mortgage demand was down 4.5% year-over-year, despite lower interest rates. Refinance demand was also lower in May.
“Economic uncertainty, rising mortgage rates and increasing competition from growing existing-home sales inventory likely dampened overall demand for new-home purchases in May,” association vice president and chief deputy economist Joel Kan said in a statement.
“Applications to purchase newly built homes fell to their slowest pace in three months as buyers held off on their purchase decisions,” he added. Mortgage applications were down 9% compared with April.
According to the mortgage bankers’ group, new single-family home sales dropped 12.1% from April’s sales level. The association estimated that 631,000 new homes sold in May, compared with 718,000 in April.
Kan said applications to buy newly built homes fell to the lowest level in three months.
The average mortgage loan for new homes was $379,209 in May. In April it was $376,992.
Mortgage loan application volume for the week ending June 13 was down 2.6% from a week earlier, according to the association.
That is despite interest rates dropping to 6.84% for a 30-year fixed loan, the lowest level since April.
Mortgage News Daily CEO Matthew Graham wrote in a statement that what the Federal Reserve does next could cause the mortgage market to react.
“This has nothing to do with ‘cut vs no cut’ (there is zero chance of a rate cut) and everything to do with the other information the Fed presents on announcement days,” Graham wrote. “Of this info, it is the dot plot that carries the most weight.”
The dot chart is the Fed’s rate outlook over several years.
The movie “The Big Short” — dramatizing the reckless behavior in the banking and mortgage industries that contributed to the 2008 financial crisis — captures much of Wall Street’s misconduct but overlooks a central player in the collapse: the federal government, specifically through Fannie Mae and Freddie Mac.
Another critical but overlooked factor in the collapse was the Community Reinvestment Act. This federal law was intended to combat discriminatory lending practices but instead created substantial market distortions by pressuring banks to extend loans to borrowers who might otherwise have been deemed too risky. Under threat of regulatory penalties, banks significantly loosened lending standards — again, inflating the housing bubble.
After the bubble inevitably burst, Fannie and Freddie were placed under conservatorship by the Federal Housing Finance Agency. The conservatorship imposed rules aimed at preventing future taxpayer-funded bailouts and protecting the economy from government-fueled market distortions.
Now, President Trump’s appointee to lead that agency, Bill Pulte, is considering ending this conservatorship without addressing the core structural flaw that fueled the problem in the first place: implicit government guarantees backing all Fannie and Freddie mortgages. If Pulte proceeds without implementing real reform, taxpayers on Main Street are once again likely to be exposed to significant financial risks as they are conscripted into subsidizing lucrative deals for Wall Street.
Without genuine reform, the incentives and practices that led to the crisis remain unchanged, setting the stage for a repeat disaster.
Pulte’s proposal isn’t likely to unleash free-market policies. Instead, it could further rig the market in favor of hedge funds holding substantial stakes in Fannie and Freddie, allowing them to profit enormously from the potential upside, while leaving taxpayers to bear all the downside risks.
A meaningful solution requires Fannie and Freddie to significantly strengthen their capital reserves. The two government-sponsored enterprises still remain dangerously undercapitalized. A report from JP Morgan Chase describes it this way: “Despite steady growth in [their net worth], the GSEs remain well below the minimum regulatory capital framework requirements set by the Federal Housing Finance Agency in 2020.” Imposing robust capital requirements similar to those that govern private banks would oblige the two enterprises to internalize their risks, promoting genuine market discipline and accountability.
Further reforms should address transparency and oversight. Enhanced disclosure standards would allow investors, regulators and the public to better assess risks. Additionally, limiting the types of mortgages these entities can guarantee could reduce exposure to the riskiest loans, further protecting taxpayers. Implementing clear rules that prevent Fannie and Freddie from venturing into speculative financial products would also mitigate potential market distortions.
Critically, the federal government must clearly communicate that future bailouts are not an option. Explicitly removing government guarantees would compel Fannie and Freddie to operate responsibly, knowing that reckless behavior will lead to their insolvency, not to another taxpayer rescue. Clear legal separation from government backing is essential to prevent moral hazard.
The combination of government guarantees, regulatory pressure from policies such as the Community Reinvestment Act and inadequate capital standards created the perfect storm for the 2008 financial crisis. Ignoring these lessons and repeating past mistakes would inevitably lead to a similar disaster.
Proponents of prematurely releasing Fannie and Freddie argue that market conditions have changed and risk management has improved. Yet, history repeatedly demonstrates that without structural changes, financial entities — particularly those shielded by government guarantees — inevitably revert to risky behavior when market pressures and profit incentives align. Markets function best when participants bear the full consequences of their decisions, something impossible under the current structure of these government-sponsored enterprises.
Ultimately, the only responsible approach is removing taxpayers from the equation entirely. Fannie Mae and Freddie Mac should participate in the mortgage market only as fully private entities, without any implicit government guarantees.
The American public doesn’t need a sequel to “The Big Short.” The painful lessons of the 2008 crisis are too recent and too severe to be ignored or forgotten. Market discipline, fiscal responsibility and genuine reform — not government-backed risk-taking — must guide our approach going forward. We can only hope that the Trump administration chooses fiscal responsibility over risky experiments that history has already shown end in disaster.
Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University. This article was produced in collaboration with Creators Syndicate.
Financial giant Fannie Mae (corporate headquarters in Washington, D.C., pictured in July 2008) said Wednesday it will launch an AI-powered unit to detect and prevent mortgage fraud in a partnership with AI software company Palantir. File Photo By Alexis C. Glenn/UPI | License Photo
May 28 (UPI) — Financial giant Fannie Mae said Wednesday it will launch its AI-powered unit to detect and prevent mortgage fraud in a partnership with AI software company Palantir.
“By integrating this leading AI technology, we will look across millions of datasets to detect patterns that were previously undetectable,” said Fannie Mae’s president and chief executive officer Priscilla Almodovar.
Fannie Mae, which holds more than $4 trillion in U.S. housing market assets, is the nation’s single largest holder of outstanding residential mortgage debt.
The launch of its new artificial intelligence-powered crime detection unit with Palantir seeks to expand Fannie’s ability to sniff out fraud with “leading” scientific and investigative AI-enabled tech.
The Washington-based Fannie Mae says its new capability will prevent and detect fraudulent activity with a “speed and precision” that, according to the company, has “never before” been seen designed to save millions of dollars in future financial losses to fraud in the U.S. housing market.
“This new partnership will combat mortgage fraud, helping to safeguard the U.S. mortgage market for lenders, homebuyers and taxpayers,” Fannie’s Almodovar continued.
Fannie Mae, which likewise owns or guarantees roughly one in four single-family mortgages and about 20% of America’s multifamily mortgages, says Palantir’s technology will provide “expansive” monitoring for anomalous transactions, activities and other digital behaviors.
According to Fannie officials, it will not only detect suspicious activity but ultimately will “trigger investigative action.”
“No one is above the law,” Fannie Mae Chairman William Pulte said in a statement.
Palantir was one of eight major tech firms to sign on to then-President Joe Biden‘s voluntary commitment in 2023 aimed to ensure AI tech is utilized responsibly.
On Wednesday, its top official said the Fannie Mae partnership will set off “a revolution in how we combat mortgage fraud” in the United States.
“We are bringing the fight directly to anyone who attempts to defraud our mortgage system and exploit hardworking Americans,” says Alex Karp, co-founder and CEO of Palantir Technologies.
