Democrats Warn Against Budget Cuts by FHFA
Commentary by Steven Lofchie
Senate Banking Committee Ranking Member Elizabeth Warren (D-MA) and other congressional Democrats warned against budget cuts by the Federal Housing Finance Agency ("FHFA").
In a joint statement, nine Democratic congressional leaders called the move unlawful. They added that it would likely lead to about 40 law enforcement personnel being fired.
At a Senate Banking Committee hearing, Ms. Warren claimed that the budget cuts would force the agency's Office of Inspector General ("OIG") to drop essentially all of its criminal investigations. The Senator entered a letter from the Office into the record that said $20 million in funding would require staff cuts of about 70 to 80 percent in fiscal year 2027. The letter said the OIG would stop supporting ongoing criminal investigations, including those in more than 30 U.S. Attorneys' Offices.
Separately, 11 Senate Banking Committee Democrats wrote to FHFA Director Bill Pulte that the budget is a reduction of more than 60 percent from fiscal year 2026. They said FHFA is legally obligated to give OIG the resources it needs. They demanded a budget no less than its original request.
FHFA said that it was setting a "peer-matched" budget. It said the Office had requested 16 percent of FHFA's operating budget, against an Inspector General average of about 2 percent. According to the agency, the Office headcount was 18 percent of FHFA's workforce, against an average of 4 percent. FHFA added that it supported the Office's independence and mission.
Commentary
The cited statutory provision, 12 U.S.C. 4516, does require the Director of the FHFA to establish and collect fees to provide for the reasonable costs and expenses of the agency. The statute says nothing about the OIG in particular, and the notion that a particular subordinate official within the FHFA has statutory authority to set that subordinate official's budget is incorrect.
Whatever one's view may be on the desired level of funding for the FHFA in general, or for an office of the FHFA in particular, members of Congress should be more mindful of the limits of authority that has been granted to government employees; they are generally not authorized to write their own checks. Further, 12 U.S.C. 4515(d) makes it quite clear that it is the FHFA Director, not his subordinates, who "determines [what is] necessary to assist the work of the [FHFA]."