Friday, December 21, 2012
A Nest of Vipers
In my last blog, I discussed the fact—unknown to me previously—that individuals working in federal Offices of the Inspector General, including the IG himself/herself are permitted to carry badges and firearms, if so approved by the US Attorney General.
The most recent report I saw, from four years ago, said that there are more than 3000 gun packing IG staffers throughout Uncle Sam’s world. I suspect that number is higher today.
Damn! That a ton of highly questionable firearms for jobs that seldom, if ever, require force backed by weaponry or are danegrous. But this piece is not about clerks with guns.
What that blog also produced was a variety of incoming communications about Fannie’s and Freddie’s regulator, the Federal Housing Finance Agency, and specifically its Office of Inspector General, which Steve Linick heads.
The most jarring message I read had to do with the size of Linick’s operation. The FHFA IG has some 150 employees (“some with badges and guns,” as Linick reminded GSE employees about a year ago) in an agency which has a non-OIG staff of barely over 500 people.
Sharp minds understand that IGs are supposed to look primarily inward at the workings of his own agency. Yet this guy needs 150 people—or one IG staffer for every 3.5 FHFA colleagues—to make sure they are doing their job?
Well, the answer is “yes” and “no.”
IG Linick Is......
It seems Sheriff Steve sees his mission as far broader than just making sure his parent agency does all of the right things. He thinks he needs to make sure that Fannie and Freddie also do the right things, whatever those are, and ergo has built an IG team to oversee that, meaning built a team to do duplicate what FHFA itself is supposed to do.
So, you have 500 FHFA overseers watching Fannie and Freddie and then you have 150 IG staff watching the “watchers,” plus now aggrandizing authority to watch Fannie and Freddie? And some of the latter “watchers” have badges and guns.
What’s wrong with this picture?
FHFA insiders—and I am not one—speak ill of Linick, as do many in Fannie and Freddie. They question his priorities and believe Linick’s all about trying to embarrass his boss, current acting FHFA director Ed DeMarco, with a bunch of “chicken*** reports.”
Is DeMarco the Target??
Now all of this needs to be played against the background of a DeMarco who has earned praise from F&F types as well as certain GOP Senators, but seems to be held in minimum high regard by some in the Treasury and the Obama WH, who reportedly want to jettison DeMarco, but can’t rid themselves of him.
Is Linick marching to his own drummer or is he doing some dirty work for the Administration?
One conjecture is that Linick’s formal reports, produced by his large and “well armed” staff, are all about putting a vocational hit on acting Director DeMarco.
I wonder if all of those Capitol Hill denizens--who worry if Fannie and Freddie will repay their federal debts--will wake up to the fact that since F&F pay for all of their regulatory overhead, the two entities could save much more money, faster, if they weren’t paying for a unusually large FHFA OIG staff?
But carefully constructed fiefdoms don’t get shrunk in DC, they just grow like Topsy, no matter how lame the justification.
WSJ On The Case
As I got into this issue, I found out that a year ago, Nick Timiraos, writing in the WSJ, covered much of this story, including the IG’s staff bloat, internecine conflicts and the FHFA’s schisms.
Many would see little changing in a year.
(See Timiraos link below.)
By law, since 1992, Fannie and Freddie have paid for their regulator’s total budget. Beginning in 2013 (in just a few weeks), every dollar the two earn now will go right into Treasury coffers and help reduce the deficit.
Cut down on Fannie’s and Freddie’s overhead expenses and you increase what goes back to Uncle Sam.
Congress, if you are trying to reduce taxpayer spending and lower the federal deficit, look at FHFA and shrink the biggest semi-independent unit inside it.
Solid savings might be had there without harming the two financial engines due to produce major Treasury cash.
The Congress should keep in mind the threatening braggadocio, which the Mexican banditos affirmed in the movie "Blazing Saddles," and apply that worthy skinflintery to the Federal Housing Finance Agency IG’s office.
"We don't need no stinkin' badges."
A Stubborn, Muleheaded, and Dangerous House
Congress is lazy, always waiting until the final minute to do anything, often punting on vexing matters they can’t decide and diluting those on which they due agree (see Dodd-Frank).
In a less mysogenistic era, it was said that Congress often “talked like Tarzan but acted like Jane!”
Lobbyists count on that quality and know its endemic to the congressional species, which tries very hard—rhetoric to the contrary—to not gore anyone’s ox, since Members never know when it could happen to them and their favorite interests.
However, this current Congress has an ugly additional element, which I seldom encountered on Capitol Hill—embodied by the Tea Party contingent in the House and a few of their Senate fellow travelers—it’s reckless.
No matter the inherent logic, if the issue doesn’t fit in their tiny little brain square, many House Republicans will oppose any effort to make it happen. No “grays,” no concessions, just black and white. (Yes, Democrats have their own but far fewer hardliners.)
It’s happening now on these desperate GOP maneuvers on the “fiscal cliff” and the nation will suffer for it and I suspect that the Republican Party will, too.
The TPers, rather than looking at their setbacks in last month’s elections as a sign that their views are not compelling, appear to be doubling down and threatening Speaker John Boehner, too, as he tries to respond to President Obama’s offer of tax and entitlement cuts.
Maybe going home for Christmas--before returning in less than a week--and getting their butts chewed off by their constituents might sober them up. These citizens appear more personally fearful of going over the fiscal cliff than their congressional representatives.
But, as my predictions of a “cliff settlement” before December 31 have been somewhat optimistic, so might this hope.
As we continue to ask God to look out for the tiny victims in Newtown, Connecticut, their families, friends, and community, we also should seek some guidance for these misguided Members of Congress.