Here is a poorly understood part of the foreclosure crisis contributing to neighborhood blight. The Government Accountability Office reports on abandoned foreclosures or “walkaways” where the mortgage servicers foreclose on a house but then don’t buy it or take it to a public sale, usually because the cost of maintaining the property exceeds the money anticipated from a property sale. (more…)
The New York Times editorializes today on the need for a president-appointed, Senate-confirmed head at the Government Accountability Office — Congress’s independent auditing arm has gone two years without a leader. This is another indication of a broken appointment and confirmation process for government positions — like a landlord stalling on fixes to an old apartment, the Senate appears content to let important business pile up.
What’s ironic is that a head at GAO would only enhance the legislative branch’s power. (more…)
David Leonhardt has a helpful New York Times Magazine piece that explains various financial regulatory reform proposals and concludes that it will be up to regulators themselves, not new regulatory rules, to prevent the next financial crisis. The analysis, though, minimizes an important element of these proposed reforms: how different the Federal Reserve is from other federal agencies that do financial regulation. (more…)
The New York Times‘ Charlie Savage got his hands on a new Government Accountability Office report that finds the Bush administration had a “significant drop in the enforcement of several major anti-discrimination and voting rights laws” compared to the Clinton administration. There has long been anecdotal evidence that the Bush Justice Dept. Civil Rights Division wasn’t enforcing the Voting Rights Act — here is the first proof that cases were significantly down.
How is the Civil Rights Division faring under Obama? New division head Thomas E. Perez says there’s a rise in enforcement. But Perez has only been on the job for a month — as is their wont, the Senate had a hold on the Perez nomination for six months.
Justin Elliot of Talking Points Memo has a nice pick-up of two reports critical of the Defense Contract Audit Agency, which is supposed to police all dealings between military and industry — or $501 billion worth of government contracts. It’s hard to audit that many contracts, but what the Government Accountability Office and Pentagon Inspector General find most problematic is not that the auditors are overwhelmed, or even incompetent. It’s that the auditors become friends with the military and private contractors, and don’t make serious audits. Pruning the Pentagon budget is one the biggest ways curtail government waste and reduce the national debt. But the DOD bureaucracy still seems far away from internal reform.
The New York Times’ Steven Greenhouse reports on a comprehensive study that looked at labor law violations committed against low-wage workers in New York City, Chicago, and Los Angeles. The study was funded by four different foundations and found that of the 4.387 workers surveyed, 68 percent had suffered a wage-law violation in the previous week. Many involved not being paid overtime.
This report comes after a March study by the Government Accountability Office that slammed the Labor Department’s Wage and Hour Division. As she said after the GAO report, Labor Sec. Hilda Solis said she was in the process of hiring 250 investigators to enforce Labor wage-and-hour law.
One particularly deflating aspect about this study is that it was done in early 2008 — when the recession had yet to gain traction. It’s a reminder that for a lot of the workforce the economy has been lousy for basically the entire decade, even the “boom” part of the boom-bust real estate cycle.-MB
The New York Times’ Edmund Andrews has a good piece today chronicling Fed Reserve Chairman Ben Bernanke’s effort to effectively campaign on behalf of Fed policies. I disagree a bit with Andrews’ premise that Bernanke is doing something unprecedented in the history of the Fed — Alan Greenspan did achieve "rock-star fame" and his predecessor, Paul Volcker, was also a prominent public figure. But the point is that Bernanke realizes the public, and Congress, are starting to cast a suspicious eye:
Republican lawmakers portray the Fed as the embodiment of heavy-handed big government, and have called for scaling back the central bank’s regulatory powers. But liberal Democrats, like Representative Dennis J. Kucinich of Ohio, have accused the Federal Reserve of caving in to demands by banks for huge bailouts, for failing to protect consumers against dangerous financial products and for being too secretive about its emergency rescue programs.
More than 250 lawmakers have signed a bill sponsored by Mr. [Ron] Paul that would allow the Government Accountability Office to “audit” the Fed’s decisions on monetary policy — a move that Fed officials see as a direct threat to their political independence in carrying out their central mission of setting interest rates.
One thing Fed expert William Greider points out in a Nation piece calling for the Fed’s democratization is that the central bank is wholly a creation of Congress. Lawmakers tend to talk about the Fed as some foreign power, but it’s the power, and duty, of Congress to control the national treasury. I think it makes sense for Bernanke to promote the very subjective decisions he makes, just like Treasury Sec. Tim Geithner does. It also makes sense for Congress to know how much money the Fed is printing and what they’re spending it on.-MB
Neil Irwin of the Washington Post has a report from the semi-annual Congressional testimony of Federal Reserve Chairman Ben Bernanke. One issue brought up was if the Government Accountability Office should audit the Federal Reserve. Once a fringe issue pushed by Ron Paul, the idea of GAO writing reports about the Federal Reserve now has majority support in the House. Bernanke says it’s bad because he claims Congress will ask for a GAO report every time the Fed raises the interest rate, thus interfering in the central bank’s independence.
But the need for much greater Federal Reserve accountability has become clear during the financial crisis. The Federal Reserve has engaged in a multi-trillion dollar bailout program that uses taxpayer money while not giving taxpayers any idea what companies are getting this money. As Irwin points out, Bernanke didn’t come to Congress yesterday to give dry, detached declarations of the national economic situation. He came to defend the Federal Reserve’s policy decisions. The Fed is making our national financial rescue policy as much, if not more, than Barack Obama and Tim Geithner. They’ve certainly spent more money than the Treasury Dept. Having the GAO write the occasional report about how they’re spending taxpayer money would be a nice first step. Even the CIA gets audited.-MB
Evan Perez of the Wall Street Journal relays a Government Accountabiltiy Office report that U.S. guns are fueling the Mexican drug war:
GAO investigators conclude that the U.S., and in particular the Southwest border states of Texas, California and Arizona, are the source of most weapons trafficked into Mexico.
The study says that despite claims from critics that Mexican cartels may also be getting weapons from Asia and elsewhere, law-enforcement officials believe that scenario is unlikely. Law-enforcement officials, cited in the study, said they saw no reason why drug cartels would go through the difficulty of importihttps://understandinggov.org/files/tag/ng guns long distances "when it is so easy for them to do so from the United States."
While the violence is over drugs it’s the guns that kill people — they were 6,200 drug-related murders in Mexico last year. For all the talk in the Bush administration of getting "tough at the border," the anti-weapons trafficking programs lead by the Justice Dept. and Dept. of Homeland Security are pretty weak stuff.-MB
Steve Vogel of the Washington Post writes up a Government Accountability Office report on FEMA’s reform efforts. The agency was told to overhaul its emergency preparedness efforts after the Hurricane Katrina super-debacle and in many respects they have. But the problem is that FEMA, under the Department of Homeland Security, needs to order other federal agencies, and also state and local governments, about what to do when there’s a hurricane or violent attack.
These problems, I think, bolster the case that FEMA needs to be an independent agency as it was before the 2003 creation of DHS. Just as the Treasury Dept. got defined powers to act in the midst of a financial crisis, FEMA needs to have unambiguous powers to make orders (i.e. call in the national guard, give local governments evacuation plans) for the next disaster.-MB
