New Plans for HUD Cleanup

U.S. Secretary of Housing and Urban Development Jack Kemp plans to change policies and procedures to end what he calls “the rip-off of poor people.” His goal is to eliminate political favoritism that during the Reagan Administration funneled millions of dollars into the pockets of well-connected Republicans. As the agency’s losses approach $2 billion, he is also proposing greater scrutiny of spending, a step that should ensure that more money is spent on housing.

To root out political favoritism, Kemp would award subsidized housing funds based on objective criteria, competition, merit and need, according to the New York Times, and not on political affiliations or friendships. By limiting discretion at HUD and making all financing decisions public, Kemp would limit the opportunities for influence-peddling, which flourished during the tenure of former housing secretary Samuel R. Pierce Jr.

Consultants--including former Interior Secretary James Watt--have received a grand total of $6 million in fees for winning lucrative rent subsidies for developers since 1983, according to a recent report to Congress. The looting became possible when funding decisions were based on the personal discretion of top housing officials and awards were no longer granted on

criteria such as local housing needs.

To tighten the scrutiny on spending, Kemp would appoint a chief financial officer with broad responsibilities. The new financial officer, as described to Congress earlier this week by a housing official, would monitor all spending and keep better track of the housing budget.

The housing secretary cannot be expected to keep track of every nickel and dime, but Kemp would make sure that someone was keeping track. He would hire additional auditors to replace those eliminated under Pierce as a cost-saving measure. That step certainly ended up costing the taxpayers.

A lack of audits allowed private escrow agents to steal millions of dollars from the sales of foreclosed HUD properties and investigators from the Justice Department may yet turn up more losses. Kemp would require private escrow agents to have state licenses and be bonded before they can sell HUD properties. The new safeguards are warranted.

Kemp is expected to announce additional reforms next month that tighten management and target low-income areas. HUD shouldn’t be in the business of building “golf courses in Florida or swimming pools in Beverly Hills.” Or, allowing the politicians who complain about waste and fraud to rip off poor people.