The FHFA announced plans to cut the Office of the Inspector General's budget, calling the watchdog an "extraordinary budgetary outlier" and saying funding will be matched to peer agencies. Democrats accused FHFA Director Bill Pulte of attempting to weaken oversight amid allegations he accessed internal mortgage records of political figures. The move comes amid major staff shakeups and lawsuits at Fannie Mae and Freddie Mac, and the FHFA says it will work with the OIG while seeking more justification for current funding levels.
FHFA Moves To Slash Inspector General's Budget Amid Allegations Over Mortgage Data Access
Credit: Unsplash/Brusk Dede
The Federal Housing Finance Agency (FHFA), led by Director Bill Pulte, announced a plan Wednesday to substantially reduce the budget of its Office of the Inspector General (OIG), calling the watchdog an "extraordinary budgetary outlier" and saying the office's funding will be adjusted to match peer federal agencies.
Agency Rationale
In a statement, the FHFA said the inspector general had requested funding equal to roughly 16% of FHFA's operating budget — compared with about 2% for the average federal agency OIG. The agency also said OIG staffing made up about 18% of FHFA's workforce, versus a roughly 4% average across the federal government. "FHFA cannot justify such a discrepancy to the American people," the agency wrote.
Political Pushback
Ten leading congressional Democrats, including Senate Democratic Leader Chuck Schumer and House Democratic Leader Hakeem Jeffries, immediately criticized the move. In a joint statement they accused Pulte of trying to "shut down the independent watchdog" and alleged the cuts come amid concerns that the OIG might investigate Pulte's own conduct — including accusations that internal mortgage data was accessed inappropriately.
"Bill Pulte Is Shutting Down The Independent Watchdog That Is Responsible For Investigating His Misconduct — Like His Efforts To Weaponize Private Mortgage Data In Sham Investigations Against The President's Perceived Political Enemies," the Democrats wrote.
Context And Controversies
The budget dispute unfolds against a backdrop of major personnel upheaval at Fannie Mae and Freddie Mac, the government-sponsored enterprises overseen by FHFA. The agency reports that roughly a dozen staffers in Fannie Mae's ethics unit were dismissed last October, and more than 100 Fannie Mae employees were fired in April for what FHFA described as unethical behavior.
Those firings prompted lawsuits: more than three dozen former employees later sued Pulte, alleging defamation and asserting they were unfairly dismissed for participation in Fannie Mae's charitable giving program.
Pulte has also faced scrutiny for his use of internal systems to view mortgage records. Reports say he reviewed mortgage files for several prominent figures, including Federal Reserve Governor Lisa Cook, Democratic Senator Adam Schiff, New York Attorney General Letitia James, and Todd Blanche, who previously served as the No. 2 official at the Department of Justice. Pulte drew national attention after publicly accusing Governor Cook of mortgage fraud and posting images of mortgage documents to social media; the dispute reached the Supreme Court, which reaffirmed the Federal Reserve's institutional independence.
FHFA Response And Next Steps
The FHFA did not release precise new budget figures for the OIG but stated it "fully supports the independence and mission" of the inspector general's office and that it "will continue to work in good faith with FHFA OIG to ensure all funds are appropriately justified." Lawmakers and watchdog advocates are expected to press for more detailed budget disclosures and oversight as the dispute continues.
Why it matters: Changes to the OIG's budget could alter the agency's capacity to audit and investigate operations at FHFA and the enterprises it supervises at a time of heightened scrutiny over leadership conduct and ethics.
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