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untanglingwebs
El Supremo
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When you look at Flint's colossal failures with HUD funding, you have to realize that HUD actually had to approve all of these plans. Flint DCED and the administration may have proposed these plans, but ultimately it was the HUD officials that signed off on these plans, including the OK Industries and Manhattan Place 108 loans. Flint is currently paying back these defunct loans with their allocated Community DEvelopment Block Grant funds. It was also HUD's role to require the city to properly monitor administration of this funding and HUD was required to properly monitor Flint. When the money doesn't move quickly, the pressure is put on HUD and Flint to perform. Sometimes warts and problems are ignored in order to move the dollars.
Five Decades of Failure Are Enough
by Tad DeHaven
Tad DeHaven is a budget analyst at the Cato Institute and co-editor of Downsizing the Federal Government.
Added to cato.org on February 10, 2010
This article appeared in the Washington Times on February 9, 2010.
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ShareThisWith trillion-dollar deficits as far as the eye can see, policymakers need to scour the federal budget for departments to cut and eliminate. They should start with ones that are not just wasteful, but actively damaging to the economy. Top of the list would be the $60 billion Department of Housing and Urban Development.
HUD's negative impact on the economy is far larger than its multibillion-dollar budget.
HUD's policies played a key role in causing the housing boom and bust and then the recession in its wake. Weak lending standards on HUD-insured mortgage loans helped fuel risky non-prime lending. HUD also put pressure on banks and the failed housing giants Fannie Mae and Freddie Mac to make risky loans to underqualified borrowers. Thanks to those policies, Fannie and Freddie went bankrupt and already have received $112 billion in taxpayer bailouts.
HUD's negative impact on the economy is far larger than its multibillion-dollar budget.
Steady increases in home-buying subsidies in recent decades were motivated by political attempts to curry favor with special interests such as the Realtor and homebuilder lobbies. Politicians justify the subsidies on their claimed civic virtues. But, as we've seen in the wake of the housing bubble's bursting, there's nothing virtuous about putting people into homes they can't afford.
Since the financial crash, the politics of housing subsidies seem to have become even worse. The housing lobby groups continue pushing to expand federal intervention in housing markets, and politicians keep increasing subsides through the Federal Housing Administration and the Government National Mortgage Association, which insure and guarantee more than $700 billion in mortgages and mortgage-backed securities.
HUD's FHA has expanded so much that it is facing the possibility of an expensive taxpayer bailout because of rising defaults on mortgages it insures. As for Ginnie Mae, its portfolio has exploded, and there are growing concerns it could be the next Fannie or Freddie.
Like housing finance, HUD's other activities also are politically driven but economically unsound. The department spends about $10 billion a year on community development programs consisting primarily of grants to states and local governments for economic development and housing development and assistance. Community development funds originally were targeted to large cities in decline, but today, this congressional cookie jar confers largesse on communities rich and poor, large and small. In addition to complexity and bureaucracy, these programs are highly susceptible to financial abuses. Community development should be left to the private sector or local governments, where residents can better weigh the benefits of local projects with the tax costs.
HUD spends more than $30 billion a year on housing assistance, which includes money for public housing authorities and rental subsidies for tenants. Dilapidated and crime-infested public housing is a vivid reminder of the government's failure when it comes to solving social ills. In recent decades, policymakers have moved away from public housing in favor of housing vouchers. However, instead of bringing an end to "concentrated poverty," that has merely spread it around. Policymakers justify these programs on a lack of affordable housing, but state and local governments themselves make housing more expensive with zoning rules and housing regulations.
Tad DeHaven is a budget analyst at the Cato Institute and co-editor of Downsizing the Federal Government.
More by Tad DeHavenHUD's current failures are not unique. It has a long history of failure and scandal. In the 1980s, HUD Secretary Samuel Pierce's eight-year tenure was so scandal-prone that it led to 17 criminal convictions, including convictions of three former HUD assistant secretaries. In the 1990s, President Clinton's HUD secretaries, Henry G. Cisneros and Andrew Cuomo, helped lay the foundation for the housing bubble with their political strategy of increasing the homeownership rate. And most recently, George W. Bush HUD Secretary Alphonso Jackson oversaw the inflation of the housing bubble and then the bust while using his office to reward friends and political allies.
Far from solving America's housing and urban problems, HUD has made them worse.
HUD should be abolished. State and local governments should be left to decide what housing and community development programs they want to fund. Even better, housing should be left to private markets, which produced massive amounts of housing for people at all income levels for many decades before government encroachment. |
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Mon Aug 16, 2010 7:50 am |
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untanglingwebs
El Supremo
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In over 20 years little has changed.
New York Times Opinion Page
Why H.U.D. Ran From Grace
By Alfred A. DelliBovi; Alfred A. DelliBovi is Under Secretary of the Department of Housing and Urban Development.
Published: September 20, 1990
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WASHINGTON— Of all the reports produced in the last decade, one stands alone in its potential to make the Government more effective and efficient.
That is the President's Private Sector Survey on Cost Control, commonly known as the Grace commission report of 1983. Its chairman, Peter Grace, and his panel pointed the way for the Federal Government to reach twin objectives: save money and deliver better service to people who need government's help.
At many Federal agencies in the Reagan Administration, such as the Department of Transportation, the Grace commission report was taken seriously. At the Urban Mass Transportation Administration, where I served as administrator, the report's recommendations were crucial in efforts to transform the agency from a weak, ineffective player to a strong, achievement-oriented agency that defined transit's leading edge.
Unfortunately, the same was not true at the Department of Housing and Urban Development, where failure to deal with problems identified by the Grace commission report created the fertile field in which scandals have grown.
At the U.M.T.A., weaknesses identified in the Grace commission report were tackled head on. The agency consolidated regional offices to save the costs of both personnel and office space. It installed a computerized and highly efficient grants management process to monitor and control ongoing mass transportation projects valued at more than $33.2 billion. It implemented new processes to correct inefficient grant disbursement procedures. As an agency of the Department of Transportation, the U.M.T.A. also participated in the consolidation of department-wide safety-related functions.
The story at H.U.D. was far different, and helps explain why mismanagement and weakness in virtually every area identified by the Grace commission eventually exploded into the H.U.D. scandals. I will mention just two examples.
The Grace commission reported to H.U.D. on Aug. 31, 1983, that many of the department's property disposition staff were unqualified and untrained. This staff was responsible for overseeing huge amounts of money and real estate agents who sold H.U.D.-owned properties and collected fees. These agents were supposed to turn over the proceeds of the sales to H.U.D.
But the recommendations fell on deaf ears at H.U.D. As a result, a Maryland real estate agent named Marilyn Harrell walked away with about $5 million in taxpayer money she should have turned over to H.U.D.
The Grace commission also reported in 1983 that a lack of procedural documentation in multi-family management was preventing managers from evaluating breakdowns and resolving problems. The commission also cited H.U.D.'s failure to force program participants to comply with rules and regulations.
In short, recommendations were ignored. As a result, developers and their consultants prostituted H.U.D.'s moderate rehabilitation program for tremendous personal gain.
In examples too numerous to mention - from cash management and debt collection, to H.U.D.'s giant, complex organization, to the incredible lack of modern accounting and financial management systems, to an almost total breakdown in management planning and evaluation, to the absence of managerial accountability - the Grace commission had H.U.D. pretty well pegged.
The real tragedy is that when the commission made its report, H.U.D. wasn't listening. Another failure. Nothing was done to implement the commission's recommendations, and many of America's top business leaders who volunteered their time on the commission were disenchanted.
As the report passes its seventh anniversary, my message to the public servants who prepared it is, Don't be discouraged. Aggressive efforts are now under way to restore strength and credibility to H.U.D. and its programs.
The Grace commission report can't just die or fade away. Under the guiding hand of real management professionals who are now being put in place at H.U.D., it lives to fight another day. |
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Mon Aug 16, 2010 8:14 am |
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