Archive for the Government Waste/Fraud/Abuse Category

Politician: Detroit “deserves” bailout or something

Posted in BIG Government, Culture, Economy, FAIL, Government Folly, Government Waste/Fraud/Abuse, Huh? WTF?, UGH! on April 13, 2011 by DaMook

Detroit Packard PlantDetroit, home of the “Big 3” US auto manufacturers (2 of which are on government life support), is the epitome of failed government social policies. Mired in political corruption (more here and here), with an abysmal school system (more here) and fleeing population, the city has become an economic and industrial wasteland (more here and here). While mayor Dave Bing deserves some credit for at least trying to turn things around, others in the city government believe that Detroit deserves a taxpayer bailout (story here from the Detroit News). Huh? WTF?

Councilwoman JoAnn Watson is reiterating her call for a government bailout of Detroit, saying the city that built the middle class deserves as much help as Wall Street or General Motors.Addressing the City Council today during Mayor Dave Bing’s budget presentation, Watson gave a spirited pitch for federal funds to help the city whose population declined 25 percent since 2000 to 713,777.

“We are worth it. We are worth at least as much as General Motors or Chrysler or the Wall Street bankers,” Watson said. “It was this city that built military vehicles for World War II. It was this city that (invented) the middle class and the five-day work week.

“We should not be in a position to be victims. We are victors. And we should demand respect.”

General Motors received $52 billion in government aid, while Chrysler received $12.5 billion, according to published reports. Mayor Dave Bing has traveled to Washington, D.C., repeatedly seeking more federal funds for Detroit.

Watson has floated the idea for years. The liberal magazine the Nation named Watson one of its 14 MVPs in 2009 for promoting a “multifacted Detroit Marshall Plan to revitalize her economically battered city.”

In the past, Watson has said the city deserves at least $1 billion.

Declared a “Model City” by the LBJ administration in the 1960’s, Detroit has received hundreds of millions in taxpayer funding. And now Detroit demands “respect.” How sad…

For a pictorial view of this disaster see these photo essays:


Top execs score big $$ as Fannie & Freddie swirl in the toilet

Posted in BIG Government, Economy, FAIL, Government Waste/Fraud/Abuse, The Regime on April 3, 2011 by DaMook

The BOHICA goodness that is Fannie Mae and Freddie Mac continues (more here, here and here). As these two giant turds swirl around a flushing financial toilet, their top executives are collecting big paychecks (story here from the NYT). Since the government (that means you, the taxpayer) took over these two FAILs in 2008, we have pumped almost $154B into this toilet with no end in sight. This is the epitome of government double down on FAIL.

Regulators have approved generous executive compensation at Fannie Mae and Freddie Mac, the taxpayer-backed mortgage finance giants, with little scrutiny or analysis, according to a report published Thursday by the inspector general of the Federal Housing Finance Agency.

The companies, whose fates are to be decided by Congress this year, paid a combined $17 million to their chief executives in 2009 and 2010, the two full years when Fannie Mae and Freddie Mac were wards of the state, the report found. The top six executives at the companies received $35.4 million over the two years. Since Fannie Mae and Freddie Mac were taken over in September 2008, the companies’ mounting mortgage losses have required a $153 billion infusion from taxpayers. Total losses may reach $363 billion through 2013, according to government estimates.

Charles E. Haldeman Jr., a former head of Putnam Investments, the giant fund management concern, joined Freddie Mac as its chief executive in 2009. He made $7.8 million for 2009 and 2010. Fannie Mae’s chief is Michael J. Williams, who has worked at the company since 1991. He received $9.3 million for the two years. Company officials declined to comment.

With hundreds of billions in government support necessary to keep the companies running, questions are arising about the nature of the pay packages and how performance goals are determined. The pay was approved by the housing finance agency, which is charged with conserving the assets of Fannie and Freddie on behalf of taxpayers.

Of course this is nothing new for Fannie & Freddie, which have been run like patronage mills for politically-connected plunderers. Using Enron accounting schemes, Clinton appointee Frank Raines skated away with over $90M in salary & “bonuses” after 5 years at Fannie. He and corruptocrat senator Chris Dodd also got sweetheart VIP loans from Countrywide pal Angelo Mozilo, who was recently fined $67.5M for securities fraud and insider trading violations.

The response from the FHFA (Federal Housing Finance Agency), government overseer of Fannie & Freddie, is not surprising. Apparently we need to pay big for quality management or the taxpayers will be harmed.

Edward J. DeMarco, acting director of the Federal Housing Finance Agency, testified before Congress on Thursday about proposals to overhaul Fannie and Freddie. “I am concerned that legislation to overhaul the compensation levels and programs in place today with the application of a federal pay system to nonfederal employees carries great risk for the conservatorships and hence the taxpayer,” he said.

Last year, Mr. DeMarco testified that the executive compensation plans at Fannie and Freddie were designed to achieve the goals of the conservatorship and “align executive decision-making with the long-term financial prospects of the enterprises, and minimize costs to the taxpayer.”

Because shares of both Fannie and Freddie have little value, the companies’ executive compensation consists solely of cash paid out in base salary, deferred salary and long-term incentive pay.

One thing that Mr. DeMarco is forgetting here is that since the government has taken over these two turds, these executives are government employees. So his argument about attracting top management geniuses to “minimize costs to the taxpayer” is fallacious.

Why not find a retired business person with a track record of saving failed companies to take over and do what really needs to be done with Fannie & Freddie – shut them down with a minimal loss to the taxpayers. Someone like Herman Cain would probably do the job for nothing. Actually I’d rather see Mr. Cain in the White House.

2010 Census: Detroit population down 25%

Posted in BIG Government, Culture, FAIL, Government Folly, Government Waste/Fraud/Abuse, UGH! on March 29, 2011 by DaMook

Lions and Tigers and FAIL, Oh My… That the city of Detroit is a FAIL is not in question (more here, here, here, and here). That it is this big of a FAIL was made apparent with the 2010 Census results. In its heyday (1950s) Detroit had almost 2 million residents. Home of the Big Three US auto manufacturers, Detroit was an industrial and economic powerhouse. Today, it is an economic and industrial wasteland that has lost more than half of its population and more are fleeing every day. Current predictions are that Detroit’s population may sink to below 500,000 by the end of the decade.

Detroit’s population has fallen steadily since the heyday of the auto industry in the 1950s, when it peaked around two million, but the declines have accelerated in recent years as manufacturing jobs have disappeared and the mortgage crisis has devastated even stable, middle-class neighborhoods. The number of vacant housing units doubled in the past decade to nearly 80,000, more than one-fifth of the city’s housing stock, the Census Bureau reported.

“For those of us who have been out in the neighborhoods, we knew that the foreclosures and the abandonment were really extreme and accelerating,” said Lyke Thompson, director of Wayne State University’s Center for Urban Studies. “The question is, can you put a bottom under it?”

In 1950, Detroit was the fifth-largest city in America, behind New York, Chicago, Philadelphia and Los Angeles, and it was in the top 10 as recently as the 1990 Census. Now, Detroit is likely to fall to 19th, behind Indianapolis and Columbus, Ohio.

Former NBA star Dave Bing is the mayor of Detroit and according to most sources, he’s been trying very hard to turn the city around. Bing replaced former mayor Kwame Kilpatrick, currently serving time in a federal prison for a variety of corruption charges. Mayor Bing is said to be incredulous about the Census results and will likely call for a recount – mostly because Detroit will lose federal (taxpayer) money.

The flight of middle-class African-Americans to the suburbs fueled an exodus that cut Detroit’s population 25% in the past decade to 713,777, according to Census Bureau data released Tuesday. That’s the city’s lowest population level since the 1910 census, when automobile mass production was making Detroit Detroit.

The decline, the fastest in city history, shocked local officials, who had expected a number closer to 800,000. Mayor Dave Bing said the city would seek a recount.

“If we could go out and identify another 40,000 people that were missed, and it brings us over the threshold of 750,000, that would make a difference from what we can get from the federal and state government,” Mr. Bing said at a news conference Tuesday.

In all, the city lost more than 237,000 residents, including 185,000 blacks and about 41,000 whites. The Hispanic population ticked up by 1,500. Meanwhile, the black population in neighboring Macomb County more than tripled to 72,723, constituting 8.6% of the county’s population in 2010, compared with 2.7% a decade earlier. Oakland County’s African-American population rose 36% to 164,078.

While Bing has made some positive changes, the answer shouldn’t be finding 40,000 phantom residents so they can get more taxpayer money. They should instead focus on fixing the problems that continue to drive residents from the city. This article (from the WSJ) explains how massive infusions of taxpayer money, coupled with failed social and economic policies, have turned Detroit into a wasteland.

Most Americans did not need to be told that Detroit is in a bad way, and has been for some time. Americans know all about white flight, greedy unions and arrogant auto executives. The recent census numbers, however, put an exclamation mark on a cold fact: A once-great American city today repels people of talent and ambition.

“Detroit is a classic example of how a culture that was legendary for enterprise and innovation was slowly eroded by toxic politicization from the 1960s on,” says the Rev. Robert A. Sirico, president of the Michigan-based Acton Institute. “It’s been class warfare on steroids, and the inevitable result is that so many Detroiters who had the means—black and white—have fled the city.”

Another way of putting it is this: Unlike New Orleans and Japan, the ruin we see in Detroit is entirely man-made.

While the decline of the US auto industry has had a huge impact on the city, Detroit’s problems go deeper and are systemic.

What happened to this Detroit? In many ways the answer is liberal politics and expanding government. In the 1960s, for example, Detroit became one of Lyndon Johnson’s “Model Cities.” That meant it was on the receiving end of hundreds of millions of federal dollars to transform a nine-mile-square section of the city. It would be just the first of many government-funded redevelopment schemes that left behind one of the most blighted urban landscapes in the nation.

Notwithstanding its failures, government continued to grow while city services—e.g., police and fire protection—continued to decline. Whites moving to the suburbs took much of the tax base out of the city in the 1960s. The latest census numbers show that blacks are now following in the path of the whites before them. Apparently they don’t like crime and the lack of decent schools for their kids either.

What’s left is the city so embarrassingly exposed by the census figures, a place that people are fleeing as fast as they can. Think of all the dysfunctional measures you can: poverty rates, unemployment, crime, failing public schools, falling home values. Detroit has them all, and most of its indicators rank among the worst in the nation.

The epitome of government FAIL…

SEC employees “disciplined” for accessing porn on govt. computers

Posted in BIG Government, Computers and Technology, FAIL, Government Waste/Fraud/Abuse, UGH! on March 10, 2011 by DaMook

The SEC has finally “disciplined” 33 employees for accessing porn on their government computers (previous posts here and here). According to this story (from WLS-TV) all of the employees have now been “disciplined” or are receiving “counseling.”

The U.S. Securities and Exchange Commission has now disciplined 33 employees for accessing pornography while on the job, using government computers.In this Intelligence Report: Many of them were lawyers and senior officials, and some were in Chicago.

Some of the employees spent every working hour looking at internet pornography then attributed their behavior to an addiction.

This conduct went on for at least five years in some cases and involved numerous high-ranking employees of the federal agency that regulates the securities industry in at least seven SEC offices including Chicago.

In the three years since the American financial system nearly crashed, some top staffers of the federal agency in charge of market recovery spent their days doing something else on their computers– including a senior attorney who spent eight hours a day in his office accessing so much pornography he ran out of hard drive storage and had to transfer photos and video to CDs and DVDs.

According to results of an internal pornography investigation, 33 employees at SEC offices, including Chicago, have now been disciplined or are receiving counseling, including an SEC accountant who searched for pornography via his government computer 16,000 times in a month, bypassing an internal government filter. He received a 14-day suspension.

All of the SEC workers cited for government ethics violations were paid at least $99,000 a year. Seventeen of them were considered senior-level employees earning annual salaries of as much as $222,000.

The SEC has almost 4000 employees and will soon hire more to accommodate the Dodd-Frank boot-to-the-face legislation passed last year. These 33 are just the ones they decided to go after. You can be sure that there are many, many more who either slipped under the radar or where considered little fish.

No details on the “discipline” but none were fired – some even claimed “victim” status. How do you think a private sector company would have handled this? Would any of these porn surfers still be employed?

FAIL: SEC fails audits seven years in a row

Posted in BIG Government, Economy, Government Folly, Government Waste/Fraud/Abuse, UGH! on February 14, 2011 by DaMook

The U.S. Securities and Exchange Commission (SEC) was established in 1934 following the crash of the stock market. Its primary responsibility is the enforcement of federal securities laws and regulating the securities industry, the nation’s stock and options exchanges, and other electronic securities markets. While it may have done a decent job in the past, its recent performance (since about 2000) has been less than stellar, to put it mildly. It has been asleep at the switch for some of the biggest scandals and financial failures of the century and it has failed its own audits seven years running (story here from the NYT).

If a company’s financial reporting were so bad that its auditor had pointed out significant weaknesses in its accounting for seven years running, the Securities and Exchange Commission would most likely be all over it.

But what if the company were the S.E.C. itself?

Since the commission began producing audited statements in 2004, the Government Accountability Office has faulted its reporting almost every year. Last November, the G.A.O. said that the commission’s books were in such disarray that it had failed at some of the agency’s most fundamental tasks: accurately tracking income from fines, filing fees and the return of ill-gotten profits.

“A reasonable possibility exists that a material misstatement of S.E.C.’s financial statements would not be prevented, or detected and corrected on a timely basis,” the auditor concluded.

Since 2000 its budget has tripled and its staff has ballooned to almost 4000 employees.

…the S.E.C. is far from starved for money. Its $1.1 billion budget in 2010 was 15 percent higher than the $960 million it received the year before — and nearly triple its $377 million budget in 2000.

Representative Spencer T. Bachus, the Alabama Republican who is chairman of the House Financial Services Committee, said last week that the tripling of the S.E.C.’s budget occurred in a period that included some of the agency’s biggest failures — the Ponzi schemes of Bernard L. Madoff and R. Allen Stanford and the collapse of Bear Stearns and Lehman Brothers.


With the Dodd/Frank boot-to-the-face avalanche of new financial regulation coming into play, the SEC is about to become even more powerful – and costly.

Dodd-Frank did authorize a doubling of the commission’s budget, to $2.25 billion, over the next five years — without providing the money for it. It also authorized the commission to spend as much as $100 million beyond its operating budget for new technology systems.

Anticipating new employees, the S.E.C. has been busily leasing more office space — an effort that has drawn the attention of the agency’s inspector general. Last week, he began investigating the S.E.C.’s decision last July to lease more than a million square feet of prime office space in Washington, one of the largest federal leases in a decade.

Within a few months of that decision, its prospects for bigger budgets fading, the S.E.C. began negotiations to return some of the leased space. The latest inquiry is the second investigation of the S.E.C.’s leasing practices in a year. Last September, H. David Kotz, the inspector general, reported that a lack of adequate policies led the agency to make lease payments that could have been avoided, including more than $15 million for space in Manhattan that no S.E.C. employees have occupied in the last five years.

Typical. Government. FAIL. With no end in sight…

US Debt hits $14T: regime economic advisor – We need MORE!

Posted in BIG Government, Congress, Economy, FAIL, Government Waste/Fraud/Abuse, The Regime on January 4, 2011 by DaMook

US Debt

The accumulated US National Debt officially reached $14 TRILLION at the end of 2010 (US Debt Clock). Since October 1, 2007 the government has added $5T in debt. Let me repeat that. In a little over 3 years our government has added FIVE TRILLION DOLLARS to the national debt (story here).

The latest posting today of the National Debt shows it has topped $14 trillion for the first time.

The U.S. Treasury website today reported that as of last Friday, the last day of 2010, the National Debt stood at $14,025,215,218,708.52.

It took just 7 months for the National Debt to increase from $13 trillion on June 1, 2010 to $14 trillion on Dec. 31. It also means the debt is fast approaching the statutory ceiling $14.294 trillion set by Congress and signed into law by President Obama last February.

The federal government would have to stop borrowing and might even default on its obligations if Congress fails to increase the Debt Ceiling before the limit is reached.

Some Republicans in the new Congress have said they’ll seek to block an increase in the Debt Ceiling unless a plan is in place to significantly reduce federal spending and unfunded government liabilities on entitlement programs such as Social Security and Medicare.

So how do you think the regime wants to handle this? By increasing the debt ceiling of course.

White House economic adviser Austan Goolsbee warned yesterday that it would be “catastrophic” if the U.S. Government were to default on its financial obligations.

“That would be the first default in history caused purely by insanity,” said Goolsbee of plans to block an increase in the Debt Ceiling.

Did it ever occur to these “geniuses” that maybe we should stop spending what we don’t have? That this whole thing is f**king insanity? Uh, no. Will the new republican majority finally put the brakes on runaway government spending? I guesss we’ll see but I’m certainly not hopeful. (more here)

During the midterm campaign, Republicans assured voters that they would put an end to the free-spending ways of Barack Obama and the Democratic majority. Now that they have taken control of the House, that fiscal discipline will be put to the test sooner rather than later. Republicans have to draft a budget for the remainder of FY2011 after Democrats failed to do so with large majorities, and that will also mean taking into account the rapidly-approaching debt ceiling. Will Republicans allow more borrowing or hold their ground on demanding deep cuts in government spending instead?

There are two problems here, one short-term and one long-term.  The national debt will rise above the limit increased last year by Democrats at the end of their spending spree in short order, and the question of defaulting on debt service becomes real and could create a lot of economic damage.  However, increasing the debt limit essentially puts off the inevitable, and it also allows Congress to procrastinate on the only long-term solution, which is to cut spending.  Refusing to raise the debt limit would force the federal government to stop spending or create a default, but much of that spending occurs through entitlements — which means that the only real way to meet the current debt limit in the short term would be to severely cut non-entitlement areas, which would probably require significant cuts at the Pentagon.

Look for congress to continue to kick the can down the road on this. They simply don’t have the guts to do what really needs to be done.

Government payments to dead people

Posted in BIG Government, Congress, Culture, Government Waste/Fraud/Abuse, Take back America on October 31, 2010 by DaMook

One of the very few voices of reason in the senate, Tom Coburn (R-OK) is a practicing physician, a true conservative, and a fiscal hawk. On many occasions he has pointed out waste/fraud/abuse in the federal government. One can only hope that Coburn and others (like Jim DeMint) will have a greater role in putting things in order after the coming elections.

Last Friday Coburn’s office released a report, entitled “Federal-Programs-To-Die-For-2,” on government payments to dead people. Here is the introduction to the report:

Over the last decade, Washington sent over $1 billion of your tax dollars to dead people. Washington paid for dead people’s prescriptions and wheelchairs, subsidized their farms, helped pay their rent, and even chipped in for their heating and air conditioning bills.

In some cases, these payments quietly gather in a dormant bank account. In many others, however, they land in the pockets of still-living people, who are defrauding the system by collecting benefits meant for a now-deceased relative.

Since 2000, the known cost of these payments to over 250,000 deceased individuals has topped $1 billion, according to a review of government audits and reports by the Government Accountability Office, inspectors general, and Congress itself. This is likely only a small picture of a much larger problem. Among the agencies making
payments to the deceased:

  • The Social Security Administration sent $18 million in stimulus funds to71,688 dead people and $40.3 million in questionable benefit payments to1,760 dead people.
  • The Department of Health and Human Services sent 11,000 dead people $3.9million in assistance to  pay heating and cooling costs.
  • The Department of Agriculture sent $1.1 billion in farming subsidies to deceased farmers.
  • The Department of Housing and Urban Development overseeing local agencies knowingly distributed $15.2 million in housing subsidies to 3,995 households with at least one deceased person.
  • Medicaid paid over $700,000 in claims for prescriptions for controlled substances written for over 1,800 deceased patients and prescriptions for
    controlled substances written by 1,200 deceased doctors.
  • Medicare paid as much as $92 million in claims for medical supplies prescribed by dead doctors and $8.2 million for medical supplies prescribed for dead patients.
  • Congress has established HIV/AIDS funding distribution based on historic numbers of deceased HIV/AIDS patients, while many individuals living with AIDS desperately wait for medical care.

In June, the administration announced new steps to stop itself from making these payments: agencies are now supposed to check their payees against the Social Security Administration’s (SSA) Death Master File (DMF). But SSA admits its records are fraught with errors. “[I]t is extremely expensive and may even be impossible to determine if a person is alive or dead particularly if the person died many years ago,” the Commissioner of SSA, Michael Astrue, explained in 2009. So the administration’s new process cannot ensure the payments will end or improperly deny live, eligible Americans their benefits.

These erroneous payments are not the fault of the administration alone. Congress has repeatedly failed to give agencies the legislative tools they need to combat this waste, and we have fallen short of our solemn duty to oversee government operations. This report finds room for improvement across the government, but nowhere are the shortcomings more glaring than on Capitol Hill.

At a time when our country has incurred a $1.3 trillion deficit and a $13.4 trillion dollar debt, these wasted funds would be better spent reducing the deficit or addressing real needs during this time of economic uncertainty.

At this point in our nation’s history, it is of the utmost importance that every tax dollar spent by the government be put to good use. This means spending within our means on the living, not outside our means on the dead.

While no one can be certain what will happen in this election until Wednesday, it sure would be nice to have a few more like Tom Coburn in congress. I’m not confident that the country club establishment republicans will get the message or not, but they better listen up. The TEA Party is not going away, it will only get stronger. The establishment republicans ignore its message at their own significant risk. They will certainly face an even angrier electorate in 2012 and beyond if they don’t bend to the will of the people.