Statement of Senator Charles E. Grassley
Before the United States Senate
Transparency at the U.S. Department of Housing and Urban Development
January 29, 2013
I come to the floor of the Senate today to speak about one of my favorite topics—transparency.
It’s no secret that I’ve worked to bring greater transparency and accountability to all parts of the federal government.
The voters of Iowa have entrusted me to continue my oversight responsibilities no matter who occupies the White House.
For several years, I have been conducting oversight of the U.S. Department of Housing and Urban Development, commonly referred to as HUD.
HUD’s core mission, according to its website, is to, “create strong, sustainable, inclusive communities and quality affordable homes for all.”
These responsibilities have grown larger and more complex over the past few years.
The mortgage crisis continues to affect the housing market.
Secretary Donovan was recently tapped to oversee the Hurricane Sandy recovery in the Northeast.
HUD’s yearly budget is nearly $38 billion.
Secretary Donovan should understand the importance of oversight and transparency to combat waste, fraud and abuse.
I have my doubts, though, because while I’ve sent dozens of letters to HUD, the Secretary has not signed a single reply.
The responses I do receive are often months late and don’t answer some of my most pressing concerns.
For instance, last August I sent a letter requesting information on conference spending and employee bonuses.
HUD provided no conference spending documents, instead urging me to review a list of Inspector General audit reports.
My staff has reviewed these audit reports but none provide a comprehensive review of conference spending.
More frustrating is that the response never referenced bonus spending at all.
It seems that oversight and transparency are not high priorities at HUD.
Every year, HUD provides at least $4 billion to public housing authorities across the country, along with the nearly $19 billion for Section 8 vouchers.
In 2009, the Obama Administration provided an extra $4 billion in stimulus funding for the housing authorities, all with little or no oversight.
Public housing authorities operate in a grey area.
HUD argues that they are state and local government entities, and it is thus state and local governments that bear the primary responsibility for the housing authorities’ actions.
But up to 90 percent of their total funding comes from the federal government, making it HUD’s responsibility to ensure that the money is spent as intended.
My office went to work to determine the compensation packages for a handful of housing authorities.
Some authorities would not provide responses but others responded with some troubling answers.
It became apparent that many executive directors were living high on the hog.
The fact is executive salaries and other compensation at some public housing authorities were a major problem and the amounts were hidden from taxpayers.
Some housing authority executive directors were earning high six-figure salaries and benefits that sometimes included a vehicle, housing allowance, and lucrative bonuses.
Many of the executive directors were making more than the governor of their state.
From Los Angeles, California, to Boston, Massachusetts, they were raking in huge salaries.
Unfortunately, no one at HUD was watching.
In Philadelphia, the executive director’s salary was $300,000 plus a $45,000 bonus.
He had a housing authority car and driver, and the housing authority actually paid his mortgage.
This money is supposed to help people with very low incomes afford safe and decent housing.
It is not supposed to subsidize the housing costs of a government bureaucrat in Philadelphia who already makes $345,000 per year.
In Chelsea, Massachusetts, the executive director’s salary was $360,000.
He cashed out weeks of unused leave and sick time while only spending about 15 full days per year in the office.
These Executive Directors used taxpayer money to build and protect their fiefdoms, usually at the expense of the poor.
In Philadelphia, this included spending millions of dollars on an army of well-connected lawyers.
Ironically, these lawyers were paid with taxpayer money to thwart investigations that were aimed at safeguarding taxpayer money.
The HUD Office of Inspector General had done battle with these armies of lawyers over and over around the country, and the taxpayers are funding both sides of the fight.
In addition, no-bid contracts and contracts steered toward friends seem to be common at many housing authorities.
As early as October 2010, I asked HUD to provide salary and compensation information for executive directors at the 25 largest housing authorities.
Instead of numbers, I received the following statement:
“In response to your questions related to Executive Directors salaries, currently HUD does not regulate compensation for housing authority Executive Directors.
“However, in light of what has taken place with [the Philadelphia Housing Authority], HUD is working closely with our Office of General Counsel to assess this policy.”
HUD needs to take this issue far more seriously.
Last Wednesday, the director of the Chelsea Housing Authority was charged with four felony counts.
According to the Boston Globe, he was indicted for deliberately concealing his salary from state and federal entities.
I hope this is a warning to other housing authorities that abuse of taxpayer dollars is unacceptable.
I commend HUD Inspector General David Montoya, the U.S. Attorney’s office in Massachusetts, and the FBI, for vigorously investigating the problems in Chelsea.
Others around the country need to take note.
I understand that this investigation continues, so stay tuned.
The number one priority for HUD and these directors should be providing safe, decent, and sanitary housing for people in need.
Feathering their own nests seems to have been the focus of some for far too long.
Unfortunately, instead of getting straight answers from HUD, I must rely on courageous whistleblowers and newspaper accounts to get the facts.
Due to mounting pressure, HUD requested the compensation data for the top five highest compensated employees at housing authorities across the country.
The results must be really embarrassing because the Obama administration would make only aggregate data public.
That way, the administration has made it impossible to tell which authorities are the worst offenders.
I asked that HUD make all salary data public in a June 2012 letter to Secretary Donovan.
It is one of many letters that the Secretary has failed to answer.
In fact, no one at HUD responded to the letter at all.
I have also sent letters to HUD requesting information about conference and travel spending, as well as the number and cost of take-home vehicles for HUD and all public housing authorities.
Letters were also sent about problems at the New York City, Houston and Port Arthur, Texas, housing authorities.
I am still waiting for responses from Secretary Donovan.
Most recently, I sent letters in October 2012 to the Senate appropriators and the Senate Banking committee with jurisdiction over these issues.
There need to be public hearings into the massive waste of taxpayer money by HUD.
My colleagues need to know the extent of the problems and that I am ready to work with members of this body to address these issues.
I would like to have these letters placed into the record.
(The letters are available here and here.)
Oversight is necessary to protect the taxpayer, and I take this duty seriously.
I am not going away and will continue to vigorously oversee problems at HUD.
I urge Secretary Donovan to make executive compensation and all funding data available to the public.
It would shed light in an area that has rarely been seen.
Transparency is not the only solution.
HUD also needs to put controls in place to prevent waste, fraud, and abuse.
But, transparency may be the quickest and most effective way to curb the worst of the abuses.
The Obama Administration could release that executive compensation data today if it wanted to, and it should.