While Wells Fargo's misdeeds have caught the main stream media's rapt attention, and given opponents of the banking industry like Liz Warren plenty of ammunition to demagogue until the cows come home (watching her call John Stumpf "gutless" is like watching Carlo Gambino calling John Gotti "crooked"), Housing Wire's Ben Lane (no fan of Wells Fargo, to be sure) reminds us that when it comes to corruption in the financial institutions arena, nobody does crooked quite as well as the government.
Thanks to what investigators are calling a “pervasive culture of waste and abuse,” millions of dollars from the federal government that were supposed to help struggling Nevada homeowners keep their homes instead went to pay for cars, holiday parties, employee bonuses, employee gifts, employee outings, staff lunches, and a number of other wasteful expenses, a scathing investigation by a federal watchdog found.
According to a new report from the Office of the Special Inspector General for the Troubled Asset Relief Program (also called SIGTARP), the state-designated contractor in charge of Nevada’s portion of the government’s Hardest Hit Fund wasted $8.2 million that was designated to pay for the administration costs of the program, all while dramatically cutting the number of struggling homeowners that the program actually helped.
The SIGTARP report shows that so far the Department of the Treasury provided $202 million in HHF funds to the Nevada Housing Department, which in turn tasked the Nevada Affordable Housing Assistance Corporation with administering the program in the state.
In addition to receiving federal funding pass along to struggling homeowners in various forms, the state housing agencies also received funding to administer the program.
According to the SIGTARP investigation, the Nevada state agency received $16.6 million to pay for its expenses, but used only roughly half of that amount as designed.
The remaining $8.2 million went to a number of expenses that were well outside the boundaries of what the federal funding was designated for.
According to Christy Goldsmith Romero, Special Inspector General For The Troubled Asset Relief Program, the Nevada Affordable Housing Assistance Corporation used the program as a “cash cow for every expense imaginable while all but stopping admitting new homeowners.”
Yeah, a "nonprofit" firm buddies up to a state housing agency that gives it millions of dollars in federal funds to help hapless homeowners and it spends the lion's share of the money on itself and its executives. TARP was a cash cow to this "homeowner assistance" outfit.
How many homeowners were actually aided by the NAHAC? We're glad you asked.
According to the SIGTARP report, the number of homeowners admitted to the program plummeted from 2,111 in 2013 to 541 in 2014 and 117 in 2015.
But at the same time, the NAHAC continued to spend millions of dollars in administrative expenses.
“While Nevada homeowners continue to struggle to recover from the financial crisis, federal dollars designated to help them have been used on holiday parties, luxury office rent, employee gift cards, and other wasteful expenses—even a $500 car allowance for a Mercedes Benz,” Romero said. “That is the textbook definition of waste and abuse.”
The SIGTARP investigation found that in 2015 the Nevada state agency kept nearly one TARP dollar for itself for every TARP dollar it provided to a homeowner.
For six months in 2015, NAHAC kept more in TARP money for itself than it distributed to homeowners.
The Wells Fargo powers-that-be have been busily throwing middle-management and line employees under the bus to try to deflect accusations that the giant bank was possessed of a culture of corruption. SIGTARP headed off any attempts by NAHAC to blame its bad behavior on a particular now-departed regime.
“We did not find isolated incidents, or that waste was under certain leadership,” Romero said.
“We found a pervasive culture of waste and abuse, coupled with a lack of performance,” Romero continued. “To allow this contractor to remain in this program puts millions of taxpayer dollars at significant risk and is a lost opportunity to give Nevada homeowners a fresh start to receive these funds.”
Incompetence coupled with corruption. The recipe for disaster whether the business is private or public, for-profit or nonprofit. Romero declares that the Nevada Housing Department should fire NAHAC and recover and refund the misspent money. That would be a nice start. How about pursuing a criminal investigation, the kind professional yappers like Warren call for whenever she finds a banker with feet of clay? And how about the Senate Banking Committee holding a hearing where its members, including Princess Fauxcahontas, slow roast senior executives of the NHD and NAHAC over a very hot griddle, with the cameras in tow recording every minute of flop-sweat? I mean if grand-standing in a public posture of moral outrage is good for the goose, it sure as hell ought to be good for the gander.
Don't hold your breath.