Housing finance agency chief moves to slash watchdog’s budget, leading Democrats to demand his resignation

Congressional Democratic leaders on Thursday called on Federal Housing Finance Agency Director Bill Pulte to resign after he moved to cut the housing regulator’s watchdog office budget to a level that the inspector general warned would “substantially inhibit” its ability to conduct independent oversight. 

On Wednesday, FHFA announced that its IG office would be scaled back after a review found that its budget and staffing were “extraordinary outlier[s]” compared with “peer OIGs.” 

“FHFA's decision reflects its responsibility to ensure that every dollar is used responsibly, efficiently and for a clearly documented purpose,” the agency said in a press release. “FHFA fully supports the independence and mission of the Office of Inspector General.” 

In a letter sent to lawmakers that same day, however, James Hodge, who is performing the duties of the FHFA IG, argued that the watchdog office’s budget is warranted because of the housing agency’s role as regulator and conservator of Fannie Mae and Freddie Mac. 

“OIG’s budget determination process directly derives from the unique mission and authorities of FHFA,” he wrote. “Fannie Mae and Freddie Mac have a combined asset total exceeding $7.8 trillion and OIG is the primary law enforcement entity responsible for ensuring that mortgage fraud in this market is investigated and prosecuted.” 

The president’s fiscal 2027 budget, which was released in April, proposed $55 million for the FHFA IG. Hodge wrote that he wasn’t informed by the agency that it would be reduced to $20 million until Aug. 31. The new fiscal year began on Thursday. 

In response, Hodge said that the agency will need to cut its staffing by up to 80%, close all field offices and “eliminate our capacity to effectively conduct criminal investigation of mortgage, bank and other fraud schemes involving the entities FHFA regulates.” 

The IG head reported that the office’s criminal enforcement program has yielded more than 1,270 convictions and nearly $75 billion in monetary results since 2011. The Trump administration has launched several initiatives to combat fraud in federal programs. 

FHFA and its OIG are not funded through congressionally approved appropriations; rather, the entities receive money from assessments on entities they regulate. 

Senior congressional Democrats, including Senate Minority Leader Chuck Schumer, D-N.Y., and House Minority Leader Hakeem Jeffries, D-N.Y., criticized FHFA’s decision to cut the IG’s funding.  

“Pulte’s corrupt crusade to protect himself and President Trump from accountability will likely result in the firing of approximately 40 law enforcement personnel who protect families from mortgage fraud,” they said in a statement. “Bill Pulte should resign, and if he does not, Congress must hold him accountable.”

Likewise, Mark Lee Greenblatt, the former Interior IG who was fired when Trump removed nearly 20 of the watchdogs at the start of his second term, said in a video posted to LinkedIn that: “Everyone should be up in arms about this unilateral move by an agency head which, as far as I know, is unprecedented in the 50-year history of the inspector general community.” 

Last year, the president removed the former acting FHFA IG reportedly after he shared information with the prosecutor’s office investigating New York Attorney General Letitia James for mortgage fraud and was planning to notify Congress that the agency was not cooperating with IG investigators. 

Pulte issued criminal referrals against several of Trump’s political opponents, including James, Federal Reserve Board Governor Lisa Cook and Sen. Adam Schiff, D-Calif. And the president has replaced acting IGs at several agencies. 

Earlier this year, Pulte had a roughly six-week tenure as acting national intelligence director that was marked by several rounds of staff cuts.