The Scoop
Ten Democratic senators are asking an independent federal watchdog to investigate the Federal Housing Finance Agency’s shakeup at mortgage giants Fannie Mae and Freddie Mac.
In a letter shared first with Semafor, a group led by Sens. Elizabeth Warren, D-Mass. and Andy Kim, D-N.J., asked FHFA inspector general Brian Tomney to probe FHFA director Bill Pulte’s decision earlier this year to remove most of the existing members of Fannie Mae and Freddie Mac’s boards, after Pulte installed himself as director of both boards.
Tomney, who was confirmed to his role during the Biden administration, should “determine whether or not FHFA leadership complied with all relevant federal laws, regulations, and agency policies and procedures in its decision making, as well as assess the impact of FHFA workforce reductions on the agency’s ability to fulfill its statutorily mandated functions,” the lawmakers wrote in the letter dated Tuesday.
Because of Fannie Mae and Freddie Mac’s role in the US mortgage market, the senators wrote, clarity in their operations is “essential to the stability of the housing finance system.” The firms process most of the nation’s mortgages, packaging them into bonds to sell to investors.
A spokesperson for FHFA did not immediately return a request for comment. A spokesperson for the inspector general told Semafor the office received the letter and “will review it in accordance with our processes.”
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The Democrats, including Minority Leader Chuck Schumer, also pressed Tomney to scrutinize the recent firing of some 100 employees at Fannie Mac for what Pulte described as fraudulent activity.
In a Fox News interview earlier this month, Pulte — who was nominated by President Donald Trump and confirmed in March — said the behavior was subject to an “ongoing investigation” but claimed the agency discovered some employees were working two jobs (some were working in China, he said) and getting kickbacks through an “internal company charity.”
News reports have suggested that the ousted employees took advantage of Fannie Mae’s program for matching gifts to certain charities.
“It is critical that federal employees not engage in unethical or illegal conduct, and FHFA should take steps to prevent fraud and, if necessary, discipline employees who break the law or fail to follow agency policies,” the Democrats wrote. “It is also, however, essential for Congress to understand whether workforce reductions at the FHFA comply with all relevant laws and agency procedures.”
Sens. Tina Smith, D-Minn., Ron Wyden, D-Ore., Cory Booker, D-N.J., Raphael Warnock, D-Ga., Catherine Cortez Masto, D-Nev., Lisa Blunt Rochester, D-Del., and Kirsten Gillibrand, D-N.Y., all signed onto the letter, in addition to Schumer, Kim, and Warren, the top Democrat on the Senate Banking Committee.
Notable
- The chaos at Fannie Mae and Freddie Mac added another layer of economic risk to Trump’s agenda, Semafor’s Eleanor Mueller reported earlier this month.
- Trump moved to fire inspectors general across multiple other agencies after assuming office.