National Consumers League

HUD expose reveals troubling problems


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By Sally Greenberg, NCL Executive Director Government agencies can be a tremendous boon to consumer protection. Examples abound: the Food and Drug Administration pulls a dangerous drug off the market or forces the recall of products contaminated with salmonella or E. Coli. The Federal Trade Commission holds a hearing on cramming on phone lines, and the Consumer Product Safety Commission looks at hazards to children from lead paint or dangerous toys. Despite their good work, all government agencies need oversight from Congress, an Inspector General, a local town counsel, or state legislature in order to operate effectively and efficiently. That clearly didn’t happen with the federal housing agency, the U.S. Department of Housing and Urban Development (HUD). The Washington Post’s recent expose on HUD’s utterly lackadaisical oversight and squandering of precious federal dollars used for housing projects is depressing. HUD allowed local housing agencies to dole out millions to troubled developers who started but didn’t finish jobs, leaving poor and middle class citizens in dire need of housing assistance without any recourse. Twenty-eight thousand so-called affordable housing projects have had work started but have ultimately been left standing and are incomplete. In Prince Georges County outside of Washington DC, a nonprofit development company received $750,000 in 2005 to build dozens of homes. Six years later not a single house has been built. No one knows what happened to the money. It seems that HUD has a penchant for giving money to developers that have no land, permits, financial capacity, or commitments for private financing. What I don’t understand is this: anyone who has had the good fortune to get a government grant is also faced with a pile of papers and dates and reports to comply with. This is a result of ensuring that those spending government funds – taxpayer funds – are held accountable. Why don’t those rules apply to developers who deal with HUD? What happens to the oversight of federal agencies that deal with the poor and disenfranchised? And where is Congress when it should be doing that ever-important oversight job? None of this is good for the reputation of government, which, as I said at the outset, is empowered to protect the interests of all of the citizens and is critical for consumer protection because the market will never perform that function. We hope the Washington Post expose will help to turn things around at HUD and ensure that those who most need housing protections get the services they need.