Plugging Up the Loot Holes

Faced with outrageous and still mounting levels of waste, fraud, theft and mismanagement that he inherited with the job, U.S. Secretary of Housing and Urban Development Jack Kemp is saying that enough is enough.

To slow things down until he can get a handle on the mess, Kemp has suspended three major programs, but says he has no intention of letting the scandal be used by ideological enemies of HUD projects as an excuse kill them outright.

With deficits still running high, Kemp may be in for the fight of his political life to keep that promise. HUD programs in 10 cities are under federal investigation. A major review of the 28 HUD programs that account for all but 6% of the money collected and spent by the agency may reveal total losses approaching $2 billion dollars.

An important part of President Reagan’s appeal to the voters was his rhetoric about rooting out waste and fraud, but the looting took place while he was in charge. Well-connected Republicans made bundles of money off the moderate rehabilitation program, which was intended to encourage the renovation of moderately run-down apartments. Billing themselves as consultants, callous former Reagan appointees and HUD officials made deals in exchange for fees amounting to hundreds of thousands of dollars while many of America’s poor went without decent housing.

HUD’s losses include at least $119 million in loan defaults from a program intended to provide housing and related services for senior citizens over the age of 70. The losses from foreclosure sales are as high as $20 million, according to an auditor general’s probe, and could go much higher.

With fresh scandals still coming to light, the inclination at HUD seems to be to proceed with caution. There is certainly a need to safeguard the public trust, but not at the expense of the poor. Outraged Americans must demand accountability and an aggressive federal housing program that serves, as Kemp put it, the needy, not the greedy.