Bill Pulte runs the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac. Its independent watchdog — the inspector general's office — was involved in an investigation of Pulte himself. Now Pulte's agency is cutting that watchdog's budget by more than 60%.

Talking Points Memo reported on October 2 that the cut "smacks of retaliation." The inspector general's office laid out what it means in a September 30 letter to Congress.

The cut

According to the letter from James Hodge, who is performing the duties of the inspector general:

• Trump's own budget, sent to Congress in April, proposed $55 million for the office — an amount Hodge called "sufficient."
• On August 31, Pulte's agency told him "for the first time" it would allocate "no more than $20 million."
• That's a 63.6% cut from what Trump proposed, and a 61.3% cut from this year's budget.
• The office even offered to drop its request to $49.9 million — what it got from 2016 to 2022. The agency's lawyer said that changed nothing.

Hodge called it "an unreasonable refusal to provide necessary resources to an Inspector General", invoking the Inspector General Act provision that requires him to notify Congress.

What it means: fraud goes uninvestigated

The office isn't a paper-pusher. Its roughly 40 special agents investigate mortgage fraud involving Fannie Mae, Freddie Mac and the Federal Home Loan Banks. Fannie and Freddie alone hold more than $7.8 trillion in assets. Since 2011, the letter says, that work has produced more than 1,270 convictions and nearly $75 billion in monetary results.

At $20 million, Hodge wrote, the office "will be forced to reduce staffing by approximately 70-80%," which "will result in the discontinuance of essentially all criminal investigations." The letter says the office will:

• stop supporting ongoing criminal cases in more than 30 U.S. Attorney's offices,
• open no new criminal matters,
• eliminate its Office of Evaluations entirely.

To cut other costs, it is weighing closing all field offices and banning travel, including travel to investigate crimes.

The first $10 million arrived September 29. At current spending, the letter says, it runs out in about three months.

The irony is in the letter too: the office had asked for slightly more money to help with the Trump administration's own stated priority of "combating the rampant and pervasive problem of fraud."

Why it looks like payback

TPM, citing the Wall Street Journal, reports that Fannie Mae's ethics and investigations team found concerns about how Pulte obtained the mortgage records of prominent Democrats, including New York Attorney General Letitia James. The concerns were serious enough to send to the FHFA inspector general, which forwarded the report to the federal prosecutors pursuing James — at least in part, the Journal reported, because it could be material to her defense.

Pulte's agency told the inspector general it no longer considers the office's long-standing budget method "valid." The office says that method had gone unchallenged since 2011.

Senate Democrats wrote to Pulte on October 1 demanding he restore at least the $57.6 million the office originally requested. TPM reports the senators also demanded his resignation; the letter itself does not.

Who got the warning

Hodge's letter went to the leaders of the committees that oversee the agency, including the Republican chairmen: Sen. Rand Paul, Rep. James Comer, Sen. Tim Scott and Rep. French Hill. Whether those chairmen do anything about a housing official defunding the office that investigated him is now up to them.

What the record shows

Bill Pulte's FHFA has cut its inspector general's budget to $20 million — 63.6% below Trump's own proposal and 61.3% below this year — after that office forwarded findings about Pulte's handling of Democrats' mortgage records to federal prosecutors. The inspector general told Congress it will have to lay off 70-80% of its staff and end essentially all criminal mortgage-fraud investigations, an operation that has produced more than 1,270 convictions since 2011.

Source

• Bill Pulte Guts the IG Office That Investigated Him — Talking Points Memo