Pulte cuts his agency’s inspector general by 61%, and the watchdog says it will end its criminal fraud investigations

What happened

In April 2026, Trump’s budget asked Congress for $55 million for the Federal Housing Finance Agency’s inspector general. The inspector general, an independent watchdog inside the agency that oversees Fannie Mae and Freddie Mac, is funded through the agency.

On August 31, FHFA’s general counsel told the office it would get “no more than $20 million” for fiscal 2027. The office cut its request to $49.9 million on September 11. FHFA said no.

On September 30, FHFA announced a “Peer-Matched” budget, saying the watchdog had asked for 16% of the agency’s operating budget against a government average of about 2%. The same day, acting inspector general James Hodge told House and Senate committees that $20 million is a 61.3% cut from 2026 and 63.6% below the President’s request. He wrote that the office will lose 70% to 80% of its staff, close its field offices and end “essentially all criminal investigations,” and called the decision “an unreasonable refusal to provide necessary resources to an Inspector General.”

Who benefited

FHFA’s leadership, which the watchdog exists to oversee. Hodge wrote that the office will keep only investigations of FHFA staff, which have historically been administrative, plus its required hotline.

Who wanted something

Pulte, whose agency said it “cannot justify such a discrepancy to the American people” and “fully supports the independence and mission” of the inspector general. In 2025 Pulte made public criminal referrals against Trump opponents including Letitia James. Reuters reported that the White House removed the office’s previous acting head after he gave prosecutors a report on how James’s mortgage records were obtained.

Who lost out

People defrauded in mortgage, bank and housing-finance schemes. Hodge wrote the cut “will eliminate our capacity to effectively conduct criminal investigation” of fraud involving Fannie Mae, Freddie Mac and the Federal Home Loan Banks. All 11 Senate Banking Committee Democrats called the cut unlawful.

Why it matters

A watchdog cannot investigate the agency that controls its budget if the agency can cut it to a third. Federal law requires FHFA to fund its inspector general at a level “sufficient” for its expenses; Hodge says this level is not.

Sources Federal Housing Finance Agency (primary)FHFA Office of Inspector General (primary)ReutersPolitico