Democrats Question Crypto Mortgage Plan | Cryptowisser News

Five prominent Senate Democrats have launched an investigation into Federal Housing Finance Agency Director William Pulte's controversial directive to integrate cryptocurrency considerations into mortgage approval processes. Led by Senator Jeff Merkley and including Elizabeth Warren, Chris Van Hollen, Mazie Hirono, and Bernie Sanders, the lawmakers sent a formal letter demanding explanations for Pulte's order that would require Fannie Mae and Freddie Mac to develop proposals for assessing crypto holdings in single-family mortgage loan underwriting without converting digital assets to dollars.

The senators expressed serious concerns about the potential risks this policy change could introduce to both consumers and the broader housing market. They highlighted cryptocurrency's notorious volatility and liquidity challenges, warning that borrowers relying on crypto assets face heightened risks of being unable to convert their holdings to cash when needed, potentially increasing mortgage default rates. The lawmakers also cited additional vulnerabilities including cyber hacks, scams, and theft that could leave homeowners without recourse for recovering lost digital assets.

Beyond market risks, the Democratic senators raised pointed questions about potential conflicts of interest surrounding the directive. They specifically noted that Pulte's spouse holds up to $2 million in cryptocurrency, while also highlighting the Trump family's extensive involvement in the crypto industry through trading platforms, tokens, mining operations, and various digital assets. The senators argued that these connections could unduly influence policy decisions affecting the housing finance system.

The investigation demands transparency on multiple fronts, with senators requesting detailed information about the decision-making process, risk assessments, and conflict mitigation strategies by August 7. They criticized the vague nature of Pulte's order and referenced previous regulatory failures, including the 2023 banking crisis where cryptocurrency exposure contributed to multiple bank collapses. While Democrats have occasionally joined Republicans on crypto legislation, such as supporting the GENIUS Act for stablecoin regulation, they have generally maintained a more skeptical stance toward digital assets. This skepticism has been evident in their introduction of restrictive measures like the COIN Act and instances where Democratic lawmakers have walked out of Republican-led crypto hearings, highlighting ongoing partisan divisions over cryptocurrency policy.