Pulte moves to gut FHFA’s internal watchdog agency

The Federal Housing Finance Agency (FHFA) is slashing the budget of its inspector general’s office in a move that the internal watchdog agency has said would result in the termination of nearly all its staff.

Top Democrats on banking, housing, oversight and finance committees across the U.S. Senate and House of Representatives are calling foul, accusing FHFA Director Bill Pulte of gutting the internal watchdog agency to avoid accountability.

“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,” the lawmakers wrote, calling on the FHFA director to resign.

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Pulte is currently being investigated by the Government Accountability Office (GAO) for his handling of criminal referrals and sensitive internal data related to a series of mortgage fraud allegations he made last year against Trump administration critics.

The FHFA director has been accused of subjective enforcement by critics, and he is being investigated by the FHFA’s Office of Inspector General (OIG) for breaking protocol by sending criminal referrals to the Department of Justice without their involvement.

A spokesperson for the GAO confirmed to Scotsman Guide on Thursday that its review process is active and ongoing. The spokesperson noted that “part of the team’s methodology included outreach [to] FHFA, FHFA OIG, and DOJ officials.” A report is expected in late 2026 or early 2027, the person said.

Pulte was tapped by President Donald Trump to lead the FHFA in March 2025. Soon after taking the job, he appointed himself board chair of Fannie Mae and Freddie Mac, the FHFA’s regulated entities.

Nearly every federal agency and cabinet-level department has an independent office of inspector general tasked with rooting out waste, fraud and abuse in federal activities.

In a press release issued Wednesday, the FHFA appeared to usurp that independent authority, describing its decision to slash the OIG budget as reflecting its own “responsibility to ensure that every dollar is used responsibly, efficiently, and for a clearly documented purpose.”

The press release did not state the size of the budget cuts, but described the FHFA OIG as representing an “extraordinary budgetary outlier among its peer OIGs.”

“On staffing levels, the FHFA OIG’s employee head count represents 18% of FHFA’s total workforce,” the press release stated, noting that this is about five times larger than the average OIG agency staffing allocation of 4%. “This OIG proportion is unmatched anywhere in the federal oversight community,” the FHFA said.

The budget cuts in question were sizable enough to warrant the FHFA OIG alerting lawmakers in the House and Senate, who disclosed in their joint statement that the cuts “would require the OIG to wind down its operations and cut nearly its entire staff.”