Democratic congressional leaders on Thursday called for the resignation of Federal Housing Finance Agency (FHFA) Director Bill Pulte following his decision to reduce the budget of the agency’s Office of Inspector General (OIG). Senate Minority Leader Chuck Schumer (D-N.Y.), House Minority Leader Hakeem Jeffries (D-N.Y.), and several committee ranking members issued a joint statement Wednesday night accusing Pulte of attempting to dismantle the independent watchdog responsible for investigating fraud and misconduct at the regulator.
The FHFA, which oversees Fannie Mae and Freddie Mac, announced on Wednesday, September 30, that it was reducing the inspector general's funding. The agency argued that the OIG's budget and staffing levels were "extraordinary outliers" compared to other federal agencies. According to the FHFA, the inspector general requested a budget equal to 16% of the agency's total operating budget, while the federal average for such offices is approximately 2%. The agency stated that OIG employees make up 18% of the FHFA workforce, whereas the average at other agencies is roughly 4%.
In a letter to lawmakers sent Wednesday, James Hodge, who is performing the duties of the FHFA inspector general, stated that the agency planned to reduce the OIG budget from a proposed $55 million to $20 million for the new fiscal year beginning Thursday, October 1. Hodge reported that he was only notified of the reduction on August 31. He warned that the 63.6% funding cut would require reducing staff by up to 80%, closing all field offices, and eliminating the office's ability to conduct criminal investigations into mortgage and bank fraud.
For the personnel involved, the change is immediate as the new fiscal year began on October 1. A typical household or renter might not see a direct change in their monthly bills, but the OIG warns that the loss of oversight capacity means the office can no longer effectively monitor the integrity of the U.S. mortgage market. Former Interior Inspector General Mark Lee Greenblatt described the move as unprecedented in the 50-year history of the federal inspector general community. The FHFA and its OIG are not funded by taxpayer appropriations from Congress; instead, they are funded through assessments on the private entities they regulate.
The conflict follows a period of turnover at the agency; the president removed acting Inspector General Joe Allen in November 2025. Pulte, who previously served a six-week tenure as acting national intelligence director, has issued criminal referrals against several political figures, including Sen. Adam Schiff (D-Calif.) and New York Attorney General Letitia James. Democratic leaders stated that if Pulte does not resign, Congress must hold him accountable, though specific legislative or committee actions were not detailed. No immediate response from the White House or a formal resignation date has been reported.