CNBC's Carl Quintanilla, Sara Eisen, and Steve Liesman break down the latest news surrounding allegations of mortgage fraud by Federal Reserve Governor Lisa Cook.

Washington

President Trump has announced that he will fire Federal Reserve Governor Lisa Cook if she does not resign, citing allegations of mortgage fraud. The accusations, brought forward by Bill Pulte, claim Cook misrepresented property status during her tenure as Fed governor, though these remain unproven at this stage.

The president's comments have sparked discussion about the legal grounds for removing a Federal Reserve governor and whether the move is politically motivated. Observers, including foreign and former central bankers, view the situation as both a serious matter and a potential attempt by the president to exert greater control over the Federal Reserve. The allegations against Cook are currently unsubstantiated, and no formal charges have been made.

Trump says he will fire Fed Governor Lisa Cook if she doesn't resign

While all this is happening, the president spoke to the media this morning in Washington. I think he was saying he was on his way to the Kennedy Center about the controversy surrounding Governor Cook. Take a listen. Are you going to fire Lisa Cook, the Fed governor, over her mortgage fraud? I'll fire her if she doesn't resign, yeah. What she did was bad, so I'll fire her if she doesn't resign. So that adds another wrinkle about what would happen if he did fire her. Okay, I'm in section 10 of the Federal Reserve Act right now. The president has the authority to fire a Fed governor with cause. Cause is a little bit up for interpretation, as we know. The latest from Bill Pulte, who has made these accusations and continues to keep them coming from the FHFA, is that he is now accusing her of the fraud when it comes to mortgages and declaring primary residences or residences and then putting houses up for rent during her time as Fed governor. And that might be important if it is proven true. Again, this is just an allegation at this point, but if those documents are proven true and there's a charge here in a crime to give the president cause, that's sort of the important point here. But no question it's heating up. Steve, is Fed Governor Cook even there? I have not seen her. I thought she was going to come last night. I have not seen her. It doesn't mean she may not arrive today. We don't know. I'm trying to get some guidance from the Federal Reserve on whether or not she is coming. Obviously, a lot of talk about it in the hallways. Seen I think primarily here, Sarah, as a political attack on the Federal Reserve. Without making judgment on whether or not she did something wrong or not, the view is that in the first instance, this was a directed search for anything dirt on the Fed. As I said yesterday, Sarah, I'm pretty sure they would not have started with Lisa Cook. They've probably been looking at all the Fed officials here and really an attempt by the president here to essentially gain as much control of the Fed as he possibly can. And I am not personally making a judgment. If she did something wrong, that's an issue that has to be dealt with. She does get a say on that. But in the first instance, it's seen in the hallways here by foreign central bankers and former central bankers who I've talked to here as a political attack on the Federal Reserve. You might not like how it's done, and it may be politically motivated, but either it happened or it didn't. And either there's fraud or it's not. And that's a serious issue. You can look at it that way, I guess, if you want. It is a serious issue. I'm not downplaying it at all. But the question is, why are we here? Right. How prevalent is this issue that happens with this? And what is her explanation of it? Could it have been handled in a way where you go to her and say, what is your response to this before I refer it to the Justice Department? And obviously, she gets to say, I'm not defending mortgage fraud and not saying it's a serious issue. The question is, why are we here? Why are we talking about it? Why does this matter to the president of the United States if somebody committed mortgage fraud? It matters because the president wants control of the Federal Reserve. So I think, Sarah, there's two equally valid ways of looking at this. I'm not denigrating your point of view on this, which is, yes, it's a potentially very serious issue. But also, yes, the president wants political control of the Federal Reserve.

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Breakdown