The Federal Housing Finance Agency is slashing the budget of its internal watchdog in a move that immediately drew rebukes from Democrats.

FHFA, led by Bill Pulte, said in a statement Wednesday that the agency's office of the inspector general “was an extraordinary budgetary outlier” among federal agencies. It said it would give the office a “peer-matched” budget in line with other federal departments.

The agency’s inspector general requested 16% of FHFA’s operating budget compared to the 2% for the average agency’s inspector general’s office, the FHFA said. Staffing levels in the FHFA’s inspector general’s office accounted for roughly 18% of its total workforce, compared to the 4% average across the federal government.

“FHFA cannot justify such a discrepancy to the American people,” FHFA said.

Congressional Democrats lambasted Pulte for the move, which comes amid high staff turnover at Fannie Mae and Freddie Mac, the federally backed mortgage giant it oversees, and as Pulte draws scrutiny for his potential abuse of internal systems. 

“Bill Pulte is shutting down the independent watchdog that is responsible for investigating his misconduct — like his efforts to weaponize private mortgage data in sham investigations against the President’s perceived political enemies,” 10 top Democrats, including Democratic Senate Leader Chuck Schumer and House Leader Hakeem Jeffries, said in a joint statement.

The agency didn’t offer specific budget details but said it “fully supports the independence and mission” of the inspector general’s office and “will continue to work in good faith with FHFA OIG to ensure all funds are appropriately justified.”

Roughly a dozen staffers in Fannie Mae’s ethics unit were also fired last October. 

Pulte, a close ally of President Donald Trump, has made aggressive staffing changes at FHFA and the agencies it oversees since taking over. He most recently faced scrutiny after it was disclosed that he used internal systems to examine the mortgages of Trump’s political adversaries. 

Pulte also created a political firestorm in August when he accused Federal Reserve Governor Lisa Cook of mortgage fraud and posted images of her signature on mortgage documents to his more than 2 million followers on X. The president picked up the allegations and tried to fire Cook, who contested the move to the Supreme Court, which upheld the central bank's independence. 

The Wall Street Journal reported last month that Pulte also looked at mortgage records for Democratic Sen. Adam Schiff of California, New York Attorney General Letitia James and Todd Blanche, now the attorney general, but at the time the No. 2 official at the Department of Justice. 

Pulte has made broad staffing changes at Fannie Mae and Freddie Mac, including by shaking up the boards of directors at both agencies less than a week after he was confirmed to the post in March 2025. Fannie Mae’s CEO resigned later that year.

The FHFA director has also made rooting out corruption a centerpiece of his tenure. More than 100 Fannie Mae employees were fired in April for what the FHFA said was unethical conduct, at the time declaring that there was “no room for fraud” in the housing agency.

More than three dozen of those staffers later sued Pulte for defamation, arguing that they were unjustly fired for their participation in Fannie Mae’s Charitable Giving program, a donation-matching benefit.