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Billions of dollars are missing from the U.S. Department of Housing and Urban Development’s books. Some HUD officials blame computer glitches; others allege widespread graft.
The Department of Housing and Urban Development (HUD) has earned a failing grade from the House Government Reform subcommittee on Government Management for the way the agency manages taxpayers’ money. Subcommittee chairman Stephen Horn, R-Calif., is said to be furious that HUD’s most recent financial report shows the agency is unable to balance its checkbook and cannot account for $59 billion.
For most Americans, it is incomprehensible that $59 billion could be missing from the ledger of a single agency. But despite years of earning failing grades — as well as years of being unable to account for tens of billions of dollars — the Clinton/Gore management team at HUD has continued to shell out hundreds of millions of dollars to the same contractors hired to ensure financial systems are in place and working. It doesn’t take a certified public accountant to see that HUD Secretary Andrew Cuomo’s financial house is not in order, and Susan Gaffney, the inspector general (IG) of HUD, tells Insight, “It’s more serious than you know.”
This dire yet brutally honest evaluation by the IG came in response to questions about her testimony concerning HUD’s 1999 audit, delivered before Horn’s subcommittee in May. And HUD’s 1999 audit still has not been completed even as the agency is nearing the starting date for the 2000 audit. Instead, Gaffney submitted a 14-page “summary” for 1999, providing a laundry list of systemic reasons for HUD’s financial woes. Indeed, it took Insight a day and a half just to make sense of the IG’s simplified testimony concerning these financial shenanigans.
Beyond the fact that $59 billion is unaccounted for and that auditors have had to make manual adjustments to the checkbook system retroactively, it is glaringly apparent in the IG’s report that taxpayers should consider themselves lucky that the amount isn’t much higher. What also is more than evident is that the IG devoted most of her testimony to explaining failed processes at HUD rather than focusing on any specific examples of theft, conversion, embezzlement and other larceny.
For instance, according to Gaffney’s testimony, she could not sign off on the 1999 audit because of “the undetermined effects of the conversion problems of the general ledger from the Program Accounting System [PAS] to HUD’s Central Account and Program System [HUDCAPS] during the fiscal year, the integrated state of HUD’s reconciliation efforts and their documentation for the general ledger accounts for the fund balance with Treasury, and the late manual posting of numerous and significant adjustments (some as late as Feb. 25, 2000) directly to the financial statements, for which we lacked sufficient time to test their legitimacy.”
What the IG is saying is that HUD’s finances are in a shambles because, during 1999, the agency was converting to a new computer system, the field offices didn’t balance their checkbooks on a monthly basis and manual postings were made to the financial statements so late that the IG had no time to review whether the postings were correct. Gaffney does report in one section of her testimony that “242 adjustments, totaling about $59.6 billion, were made to adjust fiscal year 1999 activity.”
The IG, however, does not explain where the “adjustments” were made, for what services or from which region or field office. But she tells Insight that HUD’s financial problems stem from glitches within the agency’s computer systems.
“The material weakness,” explains the IG, “is that HUD does not have a single financial ledger system in place and this year they tried to implement that. The effort was flawed to say the least. The financial systems flowing in were incompatible and the system rejected transactions, and the rejected transactions weren’t corrected in the new ledger system. HUD does not have a reliable and accurate statement of its financial condition.”
Apparently, the HUDCAPS system that has been going online since 1997 and is supposed to correct the agency’s overwhelming financial-management problems now is being scrapped. According to Gaffney, just last week she was made aware that Chief Financial Officer Victoria Bateman has decided that HUDCAPS does not do the job and that a new add-on system is being implemented. It’s anyone’s guess when the new system will be fully integrated with the old “new” system which, to date, has done nothing to enhance HUD’s ability to account for the billions of dollars in missing tax money.
According to one source familiar with HUD’s finances who spoke on condition that he not be identified, blaming computer glitches is what is done when they want to hide fraud. “The history of effort and expenditures that has been poured into correcting deficiencies at HUD does not support a theory of incompetence. If you don’t have decent accounting systems it’s because someone wants to make sure you don’t. It’s standard operating procedure that if one system is being replaced you keep the old one up and running while you work out the kinks in the new one — they’re run parallel. In this case, they took down a system that was running, replaced it with a system that wasn’t and then cried, ‘Oh, we can’t balance the books!’ They can’t say the resources don’t exist to correct the problem. If Cuomo can find hundreds of community builders to run around neighborhoods, he can find enough people to balance the checkbooks.”
And the source adds, “Furthermore, if I wanted to rip off HUD, this is exactly how I would do it. Don’t run parallel systems, don’t bother to balance the books and then radically reengineer the system all at the same time that you double the volume of work. It’s a system ripe for financial fraud. The point is that you have to know what checks were authorized in a specific place and how they sort out, and if you balance the books monthly it becomes very easy to zero in on where the fraud is taking place. What the IG has missed is that it’s not about knowing a problem exists, it’s about fixing the problem — you want to know where and why you’re missing $59 billion. A huge computer system isn’t needed for HUD to balance the books; monthly statement reconciliation is all that is necessary.”
The source continues: “Everything that has transpired at HUD is not an accident, and it sure isn’t a computer glitch. When you take the different material violations of the most basic financial-management rules and compare them to the time and effort put in to have first-rate systems, it is impossible to explain it as anything other than significant financial fraud. The losses could be far greater than $59 billion, but they don’t know for sure because the audit isn’t completed. Secretary Cuomo is a very smart control freak, so it’s ludicrous to think that he doesn’t know what is going on. There are several ways to correct these problems. Most are basic, but if you want to use the big sledgehammer, the Office of Management and Budget [OMB] and Congress have the ability to make HUD balance the books or [they] shut down the money supply. They are the guardians at the gate. But that is the most telling thing about this problem — OMB and the appropriators have been silent. This is exactly what happened right before the savings-and-loan scandal.”
So is it possible that a problem within the agency’s computer systems is the cause of tens of billions of dollars being unaccounted for or missing? Not if you ask whistle-blower Jack Ballinger.
In 1994 Ballinger began working for the New York City Housing Authority (NYCHA) as a contract inspector. He worked his way up through the system and was made manager of a new section, the Computer Operations and Reports Section. He was there only a few weeks when he became aware of major problems in payments to contractors. What he found was the main financial-management computer system, known as Financial Management Services (FMS), contained files verifying payments of more than $50 million on nearly 150 contracts that did not show up on the computer system used by the bookkeepers and investigators to track the services provided. Called CAD, this system should have been keeping track of the inspections, the inspector, dates of inspection and inspection results.
Realizing the gravity of the problem, Ballinger reported the missing files. Shortly thereafter the new section was disbanded, his staff was sent back to their previous positions and he was transferred to Coney Island as a boiler inspector. Nonetheless, he was joined in calling for an investigation by a dozen other “clean” inspectors. Ballinger first requested an investigation by the New York City Department of Investigations. When nothing happened, he contacted Bill DiBlasio, then the IG for HUD in New York (and now Hillary Rodham Clinton’s campaign manager); HUD IG Gaffney in Washington; Rep. Rick Lazio, R-N.Y.; and HUD Secretary Cuomo, whose agency provides more than 90 percent of the funding that NYCHA receives.
Despite overwhelming evidence of corruption — including audio- and videotapes of bribes being offered and accepted, as well as one inspector telling his story of an organized group of inspectors receiving bribes — there was no serious investigation of the misappropriation of funds within the NYCHA. “The IG,” says Ballinger, “said it was a paperwork mistake and cleared up. But not one person who looked at this could see it as a paperwork problem, and this has been going on for almost two years. There were hundreds of contracts being reported and monitored through that computer system and it would have taken someone a lot of work to pick out 143 that weren’t there every month. I can’t say that the inspections haven’t been done, but there is no record of the work being done on these 143 files. Still they were getting paid. It’s almost funny how sloppy they are about it. They leave a trail because they know that no one will be held accountable.”
The financial problems Ballinger uncovered in the NYCHA are similar to those at HUD. For instance, the IG’s testimony to Congress also raises the issue of a wide variety of people having access to the accounting system with no controls or audit trail to tell what transactions are taking place and under whose guidance. The IG states, “HUD uses a powerful utility system to resolve data discrepancies by directly altering the data in the HUDCAPS financial tables. … There were an excessive number of users with access to the utility, including users from four different contractor firms as well as HUD program offices. We questioned the need for the high number of users and the database administrator agreed not all the users on the list require access to perform their jobs. Allowing uncontrolled use of such a utility exposes HUD’s financial data to damage and fraudulent activities.”
Gaffney is saying that just about anyone can get into HUD’s financial system, including many who don’t have any business or authorization to be in it . Once in, intruders can change numbers, take money and engage in
financial fraud without anyone catching or stopping them. While Gaffney cannot force changes within HUD, as IG she can bring the problems to light. Unfortunately, the testimony she provided to Congress did little more than alert members to the already-known fact that there are serious financial-management problems under Cuomo at HUD. The IG’s report provides no specific data to help lawmakers, who have oversight of this agency, recommend appropriate and necessary changes. In fact, it is possible members of Congress had the same difficulty deciphering the IG’s testimony as everyone else with whom Insight has spoken. Despite the fact that the entire report by the IG to Congress deals with financial mismanagement at HUD, not once in all of her 14 pages of testimony did Gaffney so much as use the word “money.”
How much HUD’s missing $59 billion is of concern to lawmakers is anyone’s guess. Chairman Horn, as well as Senate Governmental Affairs Committee Chairman Fred Thompson of Tennessee and Senate Appropriations subcommittee on VA-HUD Chairman Kit Bond of Missouri, did not return Insight’s calls about these matters.
taxpayers should consider themselves lucky that the amount isn’t much higher
HUD officials should consider themselves lucky that they haven't been lynched by taxpayers.
bump
Chairman Fred Thompson of Tennessee and Senate Appropriations subcommittee on VA-HUD Chairman Kit Bond of Missouri, did not return Insight’s calls about these matters.
Fred Thompson needs to retire. He must have a houseload of skeletons because he never pursues the corruption. He just talks tough. He almost wet his pants over the possibility of removing Clinton from office. Coward.
And not a peep from the oh so fiscal "5 years, 50 million dollars" crowd.
The most ethical administration in history strikes again!
The money is not missing. Anyone can see with their own eyes that HUD has been building inner city slums for years now.Does the writer think they got there by accident?
It's not a big surprise that there is graft, corruption and incompetence in a federal government agency. The problem here is the agency itself...it should be disbanded.
Seven or eight years ago I took a tour of some of the projects in Detroit, which has the distinction of being the oldest public housing in the country. They have pictures of Eleanor Roosevelt at the ribbon-cutting ceremony for the first recipients of public housing.
The sad part is that the descendents of that very same family are in the very same apartment (or they were seven or eight years ago anyway).
Yet another failed handout program. I cannot think of a single person that has been lifted out of poverty by the federal government.
HUD corruption is nothing new, but I don't think it's ever involved amounts this big in the past. In fact, I'm surprised they're budgeted for this much.
No doubt a lot of this has gone into people's pockets or offshore accounts. But I really wonder how much has gone into Dem campaigns. The hundreds of millions if not billions that went missing from the Indian trust funds in the Interior Dept. were curiously well-timed for the '96 election.
Fred Thompson needs to retire. He must have a houseload of skeletons because he never pursues the corruption.
He's currently unmarried, isn't he? Plus, he has a Hollywood past, so a lot of Clintonistas know about his skeletons.
 Someone needs to hold Cuomo's feet to the fire. Why has he spent the last few months threatening the gun manufacturers, when his department cannot balance its books? HUD should be elimanted immediately--its existence has no Constitutional authorization, and the department is clearly on a corrupt power trip. Andrew Cuomo and his ilk personify statist government corruption and abuse of power. They are a threat to liberty and we need to bring them down, and here is a prime opportunity to do so. |
Is $59 Billion too big a price to keep Andrew Cuomo from becoming the next Governor of NY??..probably not...
I agree about Thompson but he's just one of 80 of those bastards that should be out. BTW how outraged we Americans about giving Russia the IMF loans to crooks. This in out backyard is more disgusting. ..and the sheeple don't care & will vote the same ones back. Example #203 of why I'm not throwing away my vote away with Pat.
HUD officials should consider themselves lucky that they haven't been lynched by taxpayers
And how many taxpayers are actually going to be made aware of this? The mainstream media will keep this quiet, just like everything else.
BTW, I e-mailed this article to Bill O'Reilly. He has been having a running story on corruption in the government agencies run by the Clinton Administration. He has so far covered: Energy (loss of nuclear secrets), Education (huge amounts of money unaccounted for, the books so bad that they cannot be audited), Transportation (the airline industry), and Agriculture (again, tons of money missing or misspent with no accountability). I figure he should now add HUD to his list.
And the source adds, “Furthermore, if I wanted to rip off HUD, this is exactly how I would do it. Don’t run parallel systems, don’t bother to balance the books and then radically reengineer the system all at the same time that you double the volume of work. It’s a system ripe for financial fraud. The point is that you have to know what checks were authorized in a specific place and how they sort out, and if you balance the books monthly it becomes very easy to zero in on where the fraud is taking place.
Absolutely 100% accurate. Computer "problems" are pure BS.
You are right, of course. The idea of a Federal Housing program is itself a form of the most severe corruption. It is a misuse of the authority and funds of the Federal Government. There is not one clause of the Constitution that authorizes any from of civilian housing.
Why should we expect those hired to administer a corrupt program to be any more honest than the program itself? If Congress can make up its own rules as it goes along, why not the bureaucrats that it hires? I almost feel like shouting, "good for them," except that it is your and my and our children's money that they and the Congress together have stolen.
Once again, the old truth, that corruption feeds on corruption, and setting a dishonest example will always be well noticed.
William Flax Return Of The Gods Web Site
I have been on the government payroll (full time consultant) for years. The toughest part of my job is submitting invoices. I work maybe 1 day a month, usually a meeting telling the bureaucrats why we cant proceed with the current project/charade because of some regulation/license expiration/improper implementation / bureaucratic infighting. Everybody should have a consulting job with the feds. Having the time of my life.
We have found that the federal agencies have a hard time accounting for funds because, they don’t make a profit, therefore none of the high-end accounting software make much sense when applied to there financial realities.
Also, nobody can be fired, so there is no incentive to be productive/do anything/show up.
"Yet another failed handout program. I cannot think of a single person that has been lifted out of poverty by the federal government."
How about Bill Clinton?
BTW why is Horn NOW involved AFTER-THE-FACT???? like all of these beaurcRATS they will be outraged for a day & ALL forgotten the next & again you vote them back in office. INCREDIBLE!!!! Again asleep at the wheel & you Horn are just as accountable.
Bet on it! A good portion of that $59 billion has been deposited in Swiss Bank accounts by Bill Clinton and his liberal democrat friends.
I have observed that most inner-city Baptist ministers wear stylish and expensive suits. Hmmm ....
The founding fathers realized that corruption would ensue if the federal government became too large and "centralized". As proof, you only need to read from Thomas Jefferson, circa 1786:
"Our country is too large to have all its affairs directed by a single government. Public servants at such a distance, & from under the eye of their constituents, must, from the circumstance of distance, be unable to administer & overlook all the details necessary for the good government of the citizens, and the same circumstance, by rendering detection impossible to their constituents, will invite the public agents to corruption, plunder & waste. And I do verily believe, that if the principle were to prevail, of a common law being in force in the U S, (which principle possesses the general government at once of all the powers of the state governments, and reduces us to a single consolidated government,) it would become the most corrupt government on the earth. You have seen the practises by which the public servants have been able to cover their conduct, or, where that could not be done, delusions by which they have varnished it for the eye of their constituents. What an augmentation of the field for jobbing, speculating, plundering, office-building & office-hunting would be produced by an assumption of all the state powers into the hands of the general government."
Jefferson knew what would happen when the federal government took over the states rights...why don't we?
Thanks for this post and for your efforts. Anybody who has liberal voting friends who also pay taxes should print this article out and give it to them. NOW! Ask them if they really think we should continue supporting blatant open theivery! Of OUR MONEY!
"Yet another failed handout program. I cannot think of a single person that has been lifted out of poverty by the federal government."
How about Bill Clinton?
Hehe...ok you have me there. But I'm not so sure he was that poverty-stricken before...the guy was slated for the Presidency from the moment he got a picture with JFK. He made his money (like the Kennedy's through graft and corruption and running illegal substances.
So many agencies, so much to skim!
sheeze
I wonder how much money the Clintons and Cuomos have stashed in numbered accounts abroad?
If this scandalous missing billions matter isn't enough to shut down HUD completely, what is?
I think Rudy Guiliani should have taken over all control of HUD from Andrew Cuomo, rather than vice-versa.
THIS P!SSES ME OFF TO NO END!
Fargin gutless congress and a mindles press and lame presidential candidates and an ingorant populace!
It's not just HUD. There are $2 billion missing from the Bureau of Indian Affairs.
There are billion missing from the National Education Association.
What is the matter with Congress! Why don't the concentrate EXCLUSIVELY on these issues? These are impeachable offenses. These agencies MUST be held accountable for the money. The whole of government - Congress, the Senate, the White House and the Courts should be investigating this. That money could have been used for so many good things, or returned to the people. Instead it is stolen, grafted, squandered, lost, and they have the NERVE to ask for more taxes?
F&*K THEM!
sorry for cursing but I AM P!SSED!
Fred Thompson needs to retire
And take Sen. Lott with him.
Their FBI files must be brimming with 'info'.
Same people running HUD as were running the nuclear labs at Los Alamos and lost all those hard disks and top secret files.
They won't shut it down. Here's the spin: "The Department has problems. We are trying to fix them. There are people who can't take care of themselves who need the federal government to step in and provide affordable housing. We are going to ask the Congress for additional apprpriations to remedy the situation."
And the source adds, “Furthermore, if I wanted to rip off HUD, this is exactly how I would do it. Don’t run parallel systems, don’t bother to balance the books and then radically reengineer the system all at the same time that you double the volume of work. It’s a system ripe for financial fraud."
So, when does Andrew Cuomo's criminal trial begin, as well as all those under him throughout the chain-of-command at HUD, and then through all the rip-off artists who they have been aiding and abbetting? There must be hundreds, or even thousands of criminals involved in the Largest Theft In American History!
I know there are those in both Parties that will claim this is "not much" money in today's terms; let "bygones-be-bygones", "let's move on", "we've learned our lesson and have fixed the problem", etc. But, at approximately $220 each for every man, woman and child in America, I want my $1320 back - the number is no doubt much higher, if this is all they have found - and is unadjusted for actual taxes I paid burden supporting these wretched thieves from my IRS confiscated earnings.
So much for the "most ethical Administration in history". But we knew that already, didn't we?
So, like I said, when do the trials (or lynchings) begin? Either way, I will be satisfied - although I must admit, the latter would give me more pleasure and would be more just!
Where's the rope?
Well done, Liz!
O'Reilly is about the only media person we can trust...I hope..
I thought taxation had that title.
As a space cadet, I would like to point out that $59 billion would make an excellent downpayment on a manned mission to Mars.
Just a thought.
At least then we would have something tangible to show for the $59 bil.
--Boris
Just another in a long line of examples of Algore's "Reinvented Government".
Maybe clinton and cuomo could do an apology tour throughout the USA, that should satisfy everyone they are really sorry about the latest SNAFU.
It's not just HUD.
There are $2 billion missing from the Bureau of Indian Affairs.
There are billion missing from the National Education Association.
What is the matter with Congress! Why don't the concentrate EXCLUSIVELY on these issues? These are impeachable offenses. These agencies MUST be held accountable for the money. The whole of government - Congress, the Senate, the White House and the Courts should be investigating this.
Yes, and Gov. Bush and the RNC should be shouting this message of "Failed Leadership" from the rooftops. Every day and all day.
And there are more:
Just the other day a Congressional hearing exposed another $5 billion missing from the Agriculture Dept..
Tens of billions of uncollected payroll taxes by the IRS.
Then you have the Energy Dept. and lost atomic secrets, Agric. Dept. burning down the National Forests, Commerce selling trade missions and allowing missile technology to be given to the Chinese, and on and on and on.
Thank you {& others}for mentioning the Indian Trust Fund scam, not to take attention away from Mr. Hud{"here, have another hardboiled egg",did I get the right Paul Neunam movie ref?}
If you want to see talent, watch how skillfully this critter crawls back under it's rock & disappears.
I knew a fellow from
Citizens for Better Government
who worked inside this beast, we're just seein' the "tip" of this "berg"!
BTW-°Trust Fund° = one of the secret weapons. "Make'm big money jump through hoop & dissappear, Chemo~sabi!"
Liz-this is absolutely sickening. How many CHILDREN would 59 BILLION provide medical insurance for??? Screw the democrats-and EVERYTHING they touch. Imagine--FIFTY FIVE BILLION.....and HOW MANY BILLIONS are MISSING from the agriculture dept???? And how many millions (or should it be BILLIONS?) have been found to be missing from the EDUCATION DEPT?
Doesn't it JUST FIGURE that a slimey, filthy, unethical, manipulative, creep like bill clinton would hire dept heads equally corrupt????
We should all be UP IN ARMS over this abuse of our taxdollars. OUTRAGED, actually. It is TIME TO HOLD PEOPLE ACCOUNTABLE. NOW! What is WRONG with our OVERSIGHT COMMITTEES??? Are they being paid off?
Has anyone checked the DNC books for a sudden influx of unaccounted for cash?
It would seem, to me, that an off the shelf accounting program would solve the problem rather quickly.
Tonto close tag, so sorry.
O'Reilly has been reporting $300 million that Dept of Educ can't account for.
I cannot think of a single person that has been lifted out of poverty by the federal government.
Not a single person out of poverty by the government's hand but, they are legion that have been driven into poverty.
We are going to ask the Congress for additional apprpriations to remedy the situation."
This is the absolute truth. During O'Reilly's speel on the Agriculture dept's missing money, the end of the report stated that AG is looking for more money to help "solve" this problem.
In Sowell's Vision of the Annointed, he lists the four stages of federal programs. The last stage is the people running the program asking for more money, after it becomes apparent that the program is a failure.
I guess Andy Cuomo has been to busy running around with the Kennedy's and trying his best to get Hitlary elected to watch the store.
BTW - Link to original article Here
Freedom or Free-Lunch that's what we must decide in November
"Example #203 of why I'm not throwing away my vote away with Pat."
What the hell is Pat gonna do about it?
. In fact, I'm surprised they're budgeted for this much.
When dealing with big numbers, I always use this yardstick: The FDA's annual budget is one billion.
It wouldn't surprise me if we eventually learn that the Clinton administration has actually taken federal money and funneled it into their campaign chests. I've heard recent stories of how much money is missing in the Departments of Education, Commerce, and Energy. Officials don't know where it has gone. The recent reports of the unusual buyers of the oil reserves [Fox news interviewed John Fund] also smells like some kind of political dealing as well. When the Democrats revoked the Hatch Act prohibiting federal employees from being involved in politics, I thought that it was a very bad move for ...
3876380
posted on 10/13/2000 00:50:20 PDT
by Prism
Slums for everyone [RealAudio]
thanks amom. You know, that 59 billion could have provided housing to all the illegal immigrants in those plywood homes Lieberman is so concerned about!
.... $59 Billion missing.
Damn ... that's more than I make in a whole month.
To help put some perspective on that number, it may be useful to have an overview of the various aspects of HUDs operations. HUD is sometimes thought of as an operator of public housing, akin to local housing authorities. But it is more of an overseer of such things, a welfare agency, and an insurance company - plus a grab bag of over redistributive schemes.
The principle activities of HUD from a financial perspective are #1 GNMA - the government national mortgage association, #2 FHA - the federal housing authoriy, and #3 HUD proper, which runs the rest of the Federal housing programs. HUD proper, in turn, #1 gives public housing subsidies to local housing authorities, #2 runs the section 8 voucher-style welfare program of rent subsidies, #3 awards community development block grants, effectively to local governments, sub-governments, or coalitions put together to receive them, and #4 engages in a grab-bag of smaller welfare style programs for various groups - Indians, aids sufferers, homeless, etc.
GNMA is effectively a government owned insurance company that "sells" the Federal credit rating. By guareenteeing payments on mortgages if other parties ahead of it in line cannot pay, it effectively removes credit risk from mortgage markets, especially at the low end of the scale, in return for modest fees. It has been around since 1968, is consistently profitable, and has earned a surplus of about $6 billion over that period, which effectively has retired that much government debt, since GNMA invests its surpluses in government debt and the government is the sole shareholder of the beastie.
GNMAs signature is on about $560 billion (yes, with a bee) in mortgage debt. It charges fees of ~$390 million a year for its insuring function, gets miscellaneous revenue of ~$17 million, and incurs about $9 million. In a typical year it may have to make good about $125 million of missed payments, but it will then recover half to 3/4ths of that eventually (seized and sold-off properties, or prior insurers paying their earlier share, etc). On the books, it also lists ~$365 million in interest from the government bonds it "holds" (has retired, in truth), but this is mere accounting. That is interest the government is paying on debt it owes itself, and therefore meaningless.
GNMA is mostly a payments mechanism, not really even the insurer itself. It operates fine and greases the wheels of the mortgage markets. Some dislike it because it competes with private organizations, none of whom can match its government credit rating. But if there is one place where economy of scale exists in finance, it is in this sort of underwriting function. So practically (as opposed to philosophically or whatever), it is not a serious concern.
The FHA is a successor to an organization started in 1934, which is a higher tier insurer of mortages, in effect. It allows houses below some price to be bought with as little as 3% down by directly insuring payments. Conventional mortgage insurance, written by private for-profit companies, usually requires ~10% down, requires that to be the borrower's own money typically (as opposed to e.g. a gift or borrowed elsewhere), and then charges in return ~0.5% of the mortgage amount up front, and 0.3% a year thereafter. The FHA charges 2.5 times as much up front and 1.67 times as much per year afterward - but waives most of the other requirements. Effectively, it is taking the lowest, least credit-worthy, tier of the market.
The FHA has insurance in force to the tune of about $400 billion for straight mortages, and about 10% more again in second mortages/home improvement loans. Banks provide the funds and earn the interest, the FHA just insures the bank of its payments in return for a small cut. It also has to go through the messier business of foreclosure when properties fall to it because of non-payment, and regularly auctions off the property so received. While not quite as simple or "high end" as GNMA, the FHA is like many other similar agencies. It is run with middling efficiency, probably replaces similar work by private firms, and effectively wind up providing a merely marginal subsidy to low-credit homebuyers as a result.
The rest of HUD, which most think of as HUD proper, has an annual budget in the range of $30 billion. It was established in 1965, and in nominal terms $500 billion has been spent on it over its whole lifetime. (In present dollars, that figure would be far higher, of course). That is comparable to the amounts the other agencies have outstanding in mortgages at any one time. The difference is, HUD proper is flat spending its $30 billion, whereas the others are just playing with a few hundreds of a percent of somewhat larger sums, as insurers.
Of HUD proper's spending, roughly 1/3rd is the section 8 voucher-style transfer payments. Once a recipient has become eligible for that, he can stay on the rolls - often with increasing amounts covered - nearly indefinitely. The program expands in two directions. Every year an "incremental number" of new beneficiaries quality for the assistance - ~100,000 to 150,000 new cases per year recently. And in addition, the amounts of each award can go up. This is a welfare program by any other name, but one whose structure interfers with local housing markets (by design), rent structures, etc.
Public housing subsidies are handouts to local agencies, like the CHA here in Chicago for example. The amount of them each year is in the single digit billions. The CD block grants are basically welfare targeted to local potentates rather than individuals - community associations, ward governments, whatever. The amounts there can run into the hundreds of million per grant and into the billions overall each year. The grab bag of others are basically welfare programs awarded to group A or B as though in a sort of socialist property right. My favorite anecdote from HUD's own website in this regard, is a program to subsidize the "rent" of aids sufferers. The page boasts the average amount awarded to each recipient is $5000 a month. This might be charity but it surely is not about paying rent.
The whole includes various property rights for urban grievance jitterbuggers, neighborhood boosterism to clean up urban blight or at least do well by pointing at it, and doubtless much under-the-table gladhanding with slum lords - all around the edges or perhaps for half. The basic nature of the agency at this point, though, is a kitty for PC types to give your money to their causes and friends. The budget has increased about 50% in the last decade, and Clinton proposed a 20% increase for the coming year.
Just some context as it appears to me, for what it is worth...
Bump!
Is $59 Billion too big
A little off topic I guess but your post caused me to ponder the number, one billion. I began to wonder who can actually
comprehend the magnitude of such a number.
Consider the number, one million. How long would it take you to spent $1,000,000 with the proviso that you must spent exactly $1,000 per day?
It would take you 1000 days or about 2.74 years.
That means that in order to spend $59,000,000,000 at that same $1,000 per day it would take you 161,660 years.
Now if we use the more exact figure of $59,600,000,000 that additional $600,000,000 would increase the task
by an additional 1,644 years for a total of 163,304 years.
HUD has 80 offices. If the $59,600,000,000 were distributed equally between the 80 offices and each office were to spend $1,000 per day
it would take each office 2,041 years to spend their share of the $59,600,000,000.
HUD has 12,000 employees. If the $59,600,000,000 were distributed equally between the 12,000 employees and each employee
were to spend $1,000 per day it would take each employee 13.6 years to spend their share of the $59,600,000,000.
Well now, there you have it, a manageable number. One could do that for 13.6 years and then proudly retire from a government job well done.
The real figure is probably double $59B. The really amazing thing is that the agency will continue to be funded.
---max
Any ideas about how to pull the plug on this monster?
Coumo...Kennedy...Gore...Et Cetera, Et Cetera, Et Cetera. Otherwise stated: tax and spend, tax and waste. Anything administered by a Democratic Administration will be replete with waste. Those people are incapable of competence.
Corruption in HUD? Can you imagine...!
Imagine....lol...here's more than imagination...
HUD Gives Up With FittsAhhhh Andrew Cuomo's HUD legacy continues....
Source:INSIGHT magazine; Published: July 6, 2001; Author: Paul M. RodriguezLow-income housing program hit (HUD Scandal Brewing?)
Source: Houston Chronicle; 06/20/2001Inside HUD’s Financial Fiasco
Source: INSIGHT magazine; Published: June 1, 2001; Author:Kelly Patricia O’MearaHUD STUD'S LATEST DUD
Source: NY Post; Published: June 01 2001; Author: editorial"We Need More Money" -- HUD Residents Whine
Source: Pittsburgh Tribune-Review; Published: May 17, 2001; Author: Mark LukasiakCuomo Leaves HUD in Shambles
Source: INSIGHT magazine; Published: February 9, 2001; Author: Kelly Patricia O’MearaWhy Is $59 Billion Missing From HUD?
Source: InsightMag.com; Published: October 14, 2000; Author: Kelly Patricia O'Meara"Ethnic Cleansing", HUD and CIA Drug Dealing
Source: From the Wildnerness/Le Metropole Café; Published: Originally May 1999/November 13, 2000; Author: Catherine Austin FittsFEDS OFFER $105M FOR HUD BAILOUT
Source: New York Post; Published:5/11/01; Author: BRIAN BLOMQUISTThankless Task (re: continued HUD scandals)
Source: INSIGHT magazine; Published: April 27, 2001; Author: Paul M. RodriguezHUD Officials Accused in Report
Source: www.Newsday.com; Published: 04/13/01; Author: Matt KelleyHUD Teacher/Cop Housing Fraud Found
Source: Bloomberg; Published: 3/29/01West Side Story (MY TITLE: Cuomo Still acting like HUD director for pers gain)
Source: ©Ithaca Times 2001 ;Published: March 20, 2001 ; Author:Jay WrolstadTexas' HUD Money Buys New York Votes (My Title)
Source: Galveston Daily News; Published: 16 Mar 2001; Author: Michael A. SmithHUD funds fuel Cuomo race
Source: The Hill; Published: February 7, 2000; Author: Melanie FonderHUD: The Horror Movie
Source: Village Voice; Published: January 10 - 16, 2001; > Author: Ward HarkavyFraud on Home Front (HUD)
Source: Newsday; Published: January 14, 2001 ; Author: Graham RaymanHUD Waste: Puff piece on Sec Cuomo cost taxpayers $750,000
Source: Houston Chronicle; Published: December 19, 2000Tenants Are Losers In Schemes For Loans (ANOTHER HUD SCANDAL)
Source: The New York Times; Published: December 10, 2000; Author: TERRY PRISTINClinton Gives Pardon in HUD Scandal
Source: Associated Press; Published: 11-21-00 ; Author: MICHAEL J. SNIFFEN"Ethnic Cleansing", HUD and CIA Drug Dealing
Source: From the Wildnerness/Le Metropole Café; Published: Originally May 1999/November 13, 2000; Author: Catherine Austin FittsFBI raids HUD office in Denver
SourceDenver Post; Published: 4 Nov 2000; Author: Mark Obmascik and Marilyn RobinsonHUD IG Files Harassment Complaint
Source: Associated Press; Published: AP-NY-10-18-00 17
Geez, 59 billion. I once got audited by rhe IRS and couldn't produce a cancelled check for a $50 donation. They all but threatened me with jail. We need to sunset all of these boondoggles and start over. I remember when the Grace Commission did an extensive study on waste, inefficiency, and corruption in government. They made hundreds of excellent recommendations, all of which were convenienbtly ignored.
57 Billion. That's a lot of salad dressing.
57 Billion. That's a lot of salad dressing.
Leave a democrat alone for a few seconds, and the numbers are off by a few billion.
"Why Is $59 Billion Missing From HUD? "
I think we just discovered how they paid for those tax rebate checks!
"HUD officials should consider themselves lucky that they haven't been lynched by taxpayers."
Actually, that applies to the whole government right about now.
I think we just discovered how they paid for those tax rebate checks!
Hmmm... 59 billion divided by about 100 million taxpayers equals (drum roll) $590 per taxpayer.
Look for the missing billions in Bill and Hillary's Swiss bank accounts.
think you are right. clintons have it.
Why Is $59 Billion Missing From HUD?
That is no brainer.
Because a certain class of people believe that stealing for them is OK. Why they end up administering government programs is a more proper question.
Why has no one been indicted or even arrested, is the most useful question of all.
You're right. I bet a lot of it went for Cadillacs and clothes.
Have you noticed that all the government huggers currently banging away in the tax-legitimacy threads to reassure us all that the taxes are legal don't bother stepping in here to explain why the government can't keep track of the money it does take.
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