Senate Democrats Question FHFA Over Crypto-Backed Mortgage Proposal

A group of five U.S. Senate Democrats is pressing the Federal Housing Finance Agency (FHFA) to explain its controversial move to consider crypto holdings in mortgage approval processes . The senators, led by Senator Jeff Merkley, sent a formal letter on Friday to FHFA Director William Pulte, seeking clarity on the potential risks and motivations behind his directive. The letter —co-signed by Senators Elizabeth Warren, Chris Van Hollen, Mazie Hirono, and Bernie Sanders—expresses deep concern over the plan’s implications for the U.S. housing market. Pulte recently ordered government-backed mortgage giants Fannie Mae and Freddie Mac to explore how they could incorporate crypto holdings into their risk assessments for single-family mortgages, even without converting the crypto into U.S. dollars first. The lawmakers have demanded a detailed response by August 7, stating, “This proposal could introduce unnecessary risks to consumers and pose serious safety and soundness concerns for the U.S. housing and financial markets.” Lawmakers Warn of Crypto Volatility and Systemic Risk The senators argue that crypto’s historical volatility, frequent liquidity issues, and exposure to scams and hacks make it an unreliable foundation for mortgage lending. They noted that current policies already prohibit Fannie Mae and Freddie Mac from considering crypto assets unless they are first converted to fiat currency. “Borrowers using crypto assets may find themselves unable to exit positions or access needed funds, heightening the risk of default,” the letter states. It also warns of increased threats from cyberattacks and physical theft that could render such assets unrecoverable. Further compounding their concerns, the senators cited past crypto-related financial instability, including the 2023 banking crisis where three banks failed in part due to their exposure to crypto-related businesses. Concerns Over Conflicts of Interest and Transparency Beyond financial risks, the letter raises ethical and procedural red flags. The senators pointed out that Pulte’s wife holds up to $2 million in crypto, and that Pulte, as chair of the boards for both Fannie Mae and Freddie Mac, could influence the very proposals he ordered—while allegedly filling those boards with crypto-friendly figures. The lawmakers also questioned the clarity of the FHFA’s order, which they claim lacks details on how proposals will be developed, what assessments will be conducted, or how stakeholder feedback will be integrated. They’ve requested that Pulte disclose internal communications, outline his recusal process for any conflicts, and provide a full explanation of how the directive will be implemented—if at all. The post Senate Democrats Question FHFA Over Crypto-Backed Mortgage Proposal appeared first on TheCoinrise.com .

Source: The Coin Rise