The nation’s top housing regulator took unprecedented steps to hinder investigations by its internal watchdog, according to an Office of Inspector General semiannual report published Monday.
The findings delivered to lawmakers mark a major escalation in the ongoing feud between Federal Housing Finance Agency Director Bill Pulte and his congressionally mandated overseers. The conflict intensified in September when Pulte announced via social media that he would slash the OIG budget by more than 60 percent.
The Federal Housing Finance Agency oversees Fannie Mae and Freddie Mac, government-owned mortgage companies holding $7.8 trillion in assets that underpin the national mortgage market. The inspector general is responsible for policing mortgage fraud that could pose risks to their portfolios while also investigating potential improprieties by agency leadership.
During the six months ending Sept. 30, the inspector general’s Office of Evaluations was unable to publish three reports due to the agency’s refusal to provide requested enterprise records and information, the report states.
Agency spokesman Jonathan Coppage disputed the characterization, stating that the housing regulator had delivered every document and participated in every interview requested by the inspector general under its statutory authorities. Coppage noted that the agency produced hundreds of pages of documents and engaged in hours of interviews concerning oversight of Fannie and Freddie’s multifamily business, citing 56 document requests and 16 separate hour-long meetings for just three recent reviews.
The conflict deepened on Sept. 30 when Acting Principal Deputy Inspector General James Hodge sent an unusual letter to lawmakers hours after Pulte announced the sweeping budget reductions. Hodge stated that the office would be forced to eliminate up to 80 percent of its staff and terminate most criminal inquiries.
The new report warns that these abrupt reductions will have devastating consequences and prevent the watchdog from conducting meaningful oversight of the agency moving forward. Agency leadership has eviscerated the inspector general’s ability to investigate and deter mortgage and bank fraud, according to the findings. Despite these constraints, OIG investigations over the preceding six months recovered $29 million and resulted in 46 indictments.
Defending the fiscal measures, Coppage argued that the inspector general had requested a budget significantly larger than those of counterparts at other federal agencies. Independence does not mean exemption from fiscal accountability, Coppage said, adding that the agency remains willing to collaborate with the watchdog to establish reasonable financial stewardship.
However, Hodge maintained that the housing watchdog differs from similar offices across the federal government because of the enormous risks to the U.S. financial system inherent in the operations of the entities under its supervision.
