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Entries in GAO (4)

Thursday
Jun282012

FHA Gave Mortgage Help to Thousands of Tax Deadbeats

iStockphoto/Thinkstock(WASHINGTON) -- Several thousand homeowners who got federal help to avoid defaulting on their mortgages were tax deadbeats who owed the government more than $77 million in back taxes, a new report has determined.

Despite owing the feds taxes, it was still legal for many of those to get help from the Federal Housing Administration. Others, however, were ineligible depending on the program for which they applied, but got the federal cash anyway.

The report by the Government Accountability Office released this week looked at two programs in the FHA during 2009 that were part of the government's Recovery and Reinvestment Act efforts to ease the mortgage crisis for many homeowners.

"In 2009, FHA insured over $1.44 billion in mortgages for 6,327 borrowers who at the same time had delinquent tax debt and benefited from the Recovery Act," the report stated. "According to IRS records, these borrowers had an estimated $77.6 million in unpaid federal taxes as of June 30, 2010."

The audit looked at the FHA's mortgage insurance program and its First Time Home Buyers Credits. Tax debtors were allowed to receive benefits from the FTHBC program, but are ineligible for the mortgage insurance program.

About half of the 6,327 had received help from the mortgage insurance program, the audit said.

Nevertheless, the GAO found that it could not determine "the proportion of borrowers who were ineligible" because of difficulty tracking each applicant, so they sampled eight borrowers.

"We found that five of our eight selected borrowers were not in valid repayment agreements at the time they obtained FHA mortgage insurance," it concluded.

The GAO warned that records show that tax deadbeats were as much as three times more likely also to default on their loans, "which potentially represents an increased risk to FHA."

The report is the most recent to detail problems with tax delinquents slipping through the review process to gain access to the FHA's mortgage insurance program.

Copyright 2012 ABC News Radio

Friday
May112012

Not a Joke: Government Issues Study of a Study About Studies

Digital Vision/Thinkstock(WASHINGTON) -- The Pentagon was inundated with so many studies in 2010 that it commissioned a study to determine how much it costs to produce all those studies. Now the Government’s Accounting Office (GAO) has reviewed the Pentagon’s study and concluded in a report this week that it’s a flop.

The study of a study of studies began in 2010 when Defense Secretary Robert Gates complained that his department was “awash in taskings for reports and studies.” He wanted to know how much they cost.

Two years later, the Pentagon review is still continuing, which prompted Congress to ask the GAO to look over the Pentagon’s shoulder. What they found lacked military precision.

The GAO found only nine studies that had been scrutinized by the Pentagon review, but the military was unable to “readily retrieve documentation” for six of the reports.

The Department of Defense’s “approach is not fully consistent with relevant cost estimating best practices and cost accounting standards,” the GAO concluded. In fact, they often did not include items like manpower, the report found.

The Pentagon “partially concurs” with the GAO’s report.

The cost of the study about the study of studies was not immediately available from the GAO.

Copyright 2012 ABC News Radio

Friday
Apr132012

Half of US Mail Facilities No Longer Needed, Study Says

iStockphoto/Thinkstock(WASHINGTON) -- A new study on the United States Postal Service shows the mail network is having a hard time keeping up with slimming down as more people turn to texting and email.

Released by the Government Accountability Office, the April study highlights the amount of excess in the mail system.

For example, the GAO says the Postal Service has 461 processing centers, but 223 of those centers are no longer needed.

It operates 8,000 mail processing machines, but the amount of mail has dwindled so much that they no longer need 3,000 of those machines.

Of the 154,000 postal employees, up to 35,000 could be let go because there is not enough mail for them to handle, the study concluded.

This excess is a result of the decline in areas such as First-Class mail volume and automation improvements in mail sorting.

The USPS has saved $2.4 billion since 2006 after starting their initiative to eliminate excess facilities and operations.  However, in the same year the gap between USPS expenses and revenues has grown.  It was predicted in February that net losses will reach $21 billion by 2016 despite actions to reduce excess cost.

The December 2011 proposal by the USPS to change overnight delivery service and move to a five day delivery schedule is currently being reviewed by the Postal Regulatory Commission.  The USPS hopes to save $22.5 billion by 2016 if the proposal is approved.

The report stated the USPS had no comment on the findings.

Copyright 2012 ABC News Radio

Thursday
Oct202011

Federal Reserve Board Rife with Conflict of Interest, GAO Report

iStockphoto/Thinkstock(WASHINGTON) -- The makeup of the Federal Reserve’s board of directors poses a conflict of interest and there is concern that several financial firms and corporations could have reaped monetary benefits from their executives’ close ties to the Fed, according to a new report released Wednesday by the Government Accountability Office.

In one case, the Federal Reserve consulted with General Electric on the creation of a commercial paper funding facility and then provided $16 billion in financing to the company while its chief executive, Jeffrey Immelt, served as a director on the board of the Federal Reserve Bank of New York.  Immelt is now President Obama’s “jobs czar.”

JP Morgan Chase could also have benefited from its chief executive Jamie Dimon’s position on the board of the Federal Reserve Bank of New York, according to the GAO.  The bank received emergency loans from the Federal Reserve at the same time it served as the clearinghouse for the Fed’s emergency lending program.

The Federal Reserve gave JP Morgan Chase an 18-month exemption from risk-based leverage and capital requirements in 2008, the same year that the Fed gave it $29 billion to acquire Bear Stearns, according to the GAO.

Similarly, Lehman Brothers’ chief executive Richard Fuld served on the board of the Federal Reserve Bank of New York at the same time one of its subsidiaries participated in the Fed’s emergency programs.

The Federal Reserve system has come under increased scrutiny in recent years, particularly for the structure of its board of directors.  Executives of banks and companies that are regulated by the Fed, and that receive emergency funding from it, often serve on the board.

“Without more complete documentation of the directors’ roles and responsibilities with regard to the supervision and regulation functions, as well as increased public disclosure on governance practices to enhance accountability and transparency, questions about Reserve Bank governance will remain,” the report states, adding that such affiliations “could create reputational risk for the Reserve Banks.”

The GAO did state that it “did not find evidence that Reserve Bank boards of directors participated directly in making any decisions about authorizing, setting the terms of, or approving a borrower’s participation in the emergency programs.”

Federal Reserve Chairman Ben Bernanke said in a letter to the GAO that the bank will consider ways to amend the bylaws to clearly explain the role of the directors.

Copyright 2011 ABC News Radio







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