Fannie Mae Ethics and Internal Investigations Unit Fired Amid Investigation into Pulte

Details

On October 30, 2025, approximately a dozen officials in Fannie Mae's ethics and internal investigations unit were fired as part of a broader layoff of 62 employees. According to The Wall Street Journal, the ethics team had been investigating whether Federal Housing Finance Agency (FHFA) Director Bill Pulte and senior officials had improperly directed staff to access mortgage records of New York Attorney General Letitia James and other Democratic officials. Chief Ethics Officer Suzanne Libby and General Counsel Danielle McCoy were removed the week prior. The FHFA's acting Inspector General, Joe Allen, who had forwarded the investigation to prosecutors, was also fired days later.

Background

Bill Pulte was confirmed as FHFA Director in March 2025. Shortly after his confirmation, he appointed himself chairman of both Fannie Mae and Freddie Mac's boards of directors, a move Democrats have questioned as legally dubious. The FHFA oversees both government-sponsored enterprises, which hold trillions of dollars in assets and serve as the backbone of the U.S. mortgage market.

Since taking office, Pulte has made criminal referrals to the Department of Justice alleging mortgage fraud against several prominent Democrats perceived as political enemies of the Trump administration:

• New York Attorney General Letitia James (indicted October 2025; charges dismissed November 2025 due to unlawful appointment of prosecutor)
• Federal Reserve Governor Lisa Cook (referred; not charged)
• Senator Adam Schiff (D-CA) (referred; not charged)
• Representative Eric Swalwell (D-CA) (referred November 2025; not charged)

An August 2025 Wall Street Journal editorial characterized Pulte's criminal referral of Cook as "an ominous turn in political lawfare" and warned that "weaponizing" Fannie and Freddie's federal regulator "won't build confidence in America's institutions or markets."

The Ethics Investigation

According to The Wall Street Journal, Fannie Mae's ethics and investigations group had received internal complaints through a staff tip line alleging that senior officials had improperly instructed employees to access mortgage documents of James and other Democratic officials. The investigators were examining:

• Who ordered the document searches
• Whether Pulte had the authority to request the documents
• Whether proper procedures had been followed

The ethics team sent their findings to the Office of Inspector General for the FHFA. Acting Inspector General Joe Allen then forwarded the report to the U.S. Attorney's office in the Eastern District of Virginia—the same office prosecuting the case against Letitia James.

Timeline of Firings

According to reporting from The Washington Post and The Wall Street Journal:

• Week of October 20: Chief Ethics Officer Suzanne Libby was fired; General Counsel Danielle McCoy resigned under pressure
• October 23: Investigators were ordered to halt their probe of a company executive close to Pulte
• October 30: Approximately a dozen ethics and internal investigations employees were fired as part of a 62-person layoff
• November 3: Acting FHFA Inspector General Joe Allen was removed from his position

Pulte announced the October 30 layoffs on X, stating: "Fannie Mae executed a standard business layoff of over 62 people, across the COO, Information Technology, 'DEI,' and other divisions." He subsequently posted a photo of a gravestone with the words "Fannie Mae DEI R.I.P." superimposed.

Inspector General Removal

Acting Inspector General Joe Allen, a 40-year veteran of the Department of Justice, was removed from his position in early November 2025. According to Reuters:

• Allen had been preparing to alert Congress that the FHFA was not cooperating with the Inspector General's office
• He had shared information with prosecutors regarding the ethics investigation
• Federal law requires 30 days' notice to Congress before removing an inspector general; no such notice was provided

The FHFA Inspector General position was subsequently listed as "currently vacant" on the agency's website.

Administration Response

The Federal Housing Finance Agency denied all allegations, with FHFA spokesmen dismissing them as "fake news from disgruntled anonymous sources."

Pulte has consistently maintained that the FHFA will pursue fraud cases regardless of political party, status, or wealth, and has denied allegations of political weaponization.

Congressional Response

Democratic Criticism: Senator Elizabeth Warren (D-MA), Ranking Member of the Senate Banking Committee, stated: "This is another example of Bill Pulte weaponizing his role to do Donald Trump's bidding, instead of working to lower costs amidst a housing crisis. His behavior raises significant questions, and he needs to be brought in front of Congress to answer them."

Senators Jack Reed (D-RI) and Elizabeth Warren sent a letter demanding an explanation for Allen's removal by November 19, 2025, citing the apparent violation of legal notification requirements.

The Government Accountability Office agreed to launch an investigation into whether Pulte and other FHFA employees potentially misused federal authority and resources to publicly accuse prominent Democrats of mortgage fraud.

Legal Implications

Representative Eric Swalwell filed a lawsuit in November 2025 against Pulte, the FHFA, Fannie Mae, and Freddie Mac, alleging that Pulte:

• Violated the Privacy Act of 1974 by improperly accessing and disclosing sensitive mortgage information
• Violated his First Amendment rights through retaliatory criminal referrals
• Fired ethics officials investigating his conduct to evade accountability

According to legal experts cited by Common Dreams, if Pulte or others improperly accessed mortgage records, they could potentially face charges under the Computer Fraud and Abuse Act, which prohibits intentionally accessing electronic files without authorization.

Industry Reaction

The firings have unsettled the housing finance industry at a critical moment. The Trump administration plans to take Fannie Mae and Freddie Mac public through what it describes as potentially the largest public offering in history. According to Pulte's statements, the plan is to sell approximately 5 percent of both companies' shares, raising $25 to $30 billion, likely in Q2 2026.

Multiple industry figures and housing finance experts have expressed concern that Pulte's tenure and the firing of ethics officials is eroding confidence in the firms' futures—confidence that would be essential for a successful public offering.

Subsequent Developments

On November 13, 2025, The Associated Press reported that a confidant of Pulte had shared confidential mortgage pricing data from Fannie Mae to competitor Freddie Mac, raising concerns about potential collusion to fix mortgage rates. Senior Fannie Mae officials who raised concerns about this disclosure were among those forced out in late October.

Key Personnel Affected

• Suzanne Libby: Chief Ethics Officer, fired week of October 20. A former Department of Justice attorney who served in the Bush and Obama administrations, she joined Fannie Mae in October 2023 and was promoted to Chief Ethics Officer in June 2025.

• Danielle McCoy: General Counsel, resigned under pressure week of October 20. A 19-year veteran of Fannie Mae who joined in 2006 and rose to general counsel in January 2024.

• Joe Allen: Acting FHFA Inspector General, removed early November 2025. A 40-year Department of Justice veteran who had served as a federal prosecutor and in senior legal positions before joining the FHFA OIG.

• Priscilla Almodovar: CEO of Fannie Mae, removed week of October 20. Replaced by COO Peter Akwaboah on an interim basis.

• Malloy Evans: Senior Vice President of Fannie Mae's single-family mortgage division, forced out in late October after raising concerns about confidential data sharing.