Obama Era Slush Funds Persisting Under Trump Admin

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A federal housing program that blew $8.1 million on employee outings, parties, lunches and gifts has defied orders to recover the money, asserting that only 1% of the cash was misspent. Barack Obama launched the scandal-plagued program, known as Hardest Hit Fund, to help families hit by the housing crisis and it operates under the Treasury Department. Over the years, several federal audits have exposed pervasive fraud and waste in the Hardest Hit Fund, but the Treasury Department has failed to take any action.

An audit conducted by the inspector general for the Troubled Asset Relief Program (TARP), Obama’s disastrous initiative to rescue the nation’s ailing financial institutions, exposed the $8.1 million waste in Nevada’s Hardest Hit Fund last year. The money was spent on outrageous things like employee outings, staff lunches and gifts, parties, a fancy car for a supervisor and severance pay for a top official.

The Treasury Department never bothered trying to recover the money, according to the audit, and the fraud continues to grow. In its lengthy report the watchdog directed the Treasury Department to recover the misspent taxpayer funds. In these cases, there is rarely any follow up but a U.S. Senator investigating the Hardest Hit Fund transgressions demanded that the Treasury Department recoup the money. The agency fired back that it disagreed with the audit’s $8.1 million figure and determined that only 1% of the money needed to be reclaimed.

In a letter addressed to the senator, Iowa Republican Chuck Grassley, Treasury Secretary for Legislative Affairs Drew Maloney writes this: “Following a thorough review, Treasury concluded that only $82,171 of such expenses were made in violation of HHF program requirements, and recovered that amount in full from the Nevada HFA.” The agency determined that “recovery of certain other expenditures was not warranted,” the letter further states, adding that the Treasury Department is committed to ensuring that taxpayer funds are utilized responsibly and for their intended purpose.

Grassley, who is chairman of the Senate Judiciary Committee, said that recovering only 1% of misspent funds is unacceptable. “Treasury’s explanation of the significant discrepancy between the $8 million that TARP’s watchdog said was misspent and the $82,172 recovered from Nevada HFA is inadequate and unconvincing,” Grassley said, adding that the agency must improve internal policing mechanisms to prevent the abuse of taxpayer dollars.

Obama created the Hardest Hit Fund in 2010 to help struggling families negatively impacted by the housing crisis that began in 2007. The former commander-in-chief asserted that homeowners in regions with high unemployment needed the government’s help to make their mortgage payment and prevent foreclosure. The government has contributed more than $9 billion to the cause and the money will be available until the end of 2020. In the Obama administration’s last year, the fund got an additional $2 billion to assist struggling homeowners and communities. “While the housing market has strengthened in recent years, there are still many homeowners and neighborhoods experiencing the negative effects of the financial crisis,” said the Treasury’s Deputy Assistant Secretary of Financial Stability when the money was doled out, assuring that the funds would help stabilize local communities and help struggling families avoid foreclosure.

Like a lot of government programs during Obama’s eight years, this one ballooned and kept receiving boatloads of cash with virtually no oversight. It started off as a $1.5 billion initiative focused on the five states with the steepest declines in home prices and grew to a $9.6 billion boondoggle encompassing 18 states and the District of Columbia. The money goes to mortgage payment assistance for unemployed or underemployed homeowners, principal reduction to help homeowners get into more affordable mortgages, and blight elimination and down payment assistance efforts.

California has received the biggest chunk of money ($2,358,593,320) followed by Florida ($1,135,735,674), Ohio ($762,302,067), Michigan ($761,204,045), and North Carolina ($706,507,564). Nevada got a total of $202,911,881, nearly $9 million of it just months before the publication of that scathing inspector general report documenting $8.1 million in fraud.

Just a few months ago, the TARP inspector general released an exhaustive 93-page report detailing the Hardest Hit Fund’s latest transgressions. Highlights include; $3 million in expenses, deemed “unnecessary” by the watchdog, spent on picnics, barbecues, gift cards, a new customer center, employee bonuses, cars, and more. Here’s a breakdown straight out of the federal audit; $598,374 went to car allowances, free parking, and other transportation perks; $342,728 was spent on settlements, severance, and other employee legal expenses; $342,407 went to employee bonuses, cash debit cards, gifts, and other perks; $258,333 was spent on “avoidable” data storage expenses; $150,618 on barbecues, parties, picnics, steak and seafood dinners, and other food and beverages.

The rest was spent on unemployment payments to former employees and a customer center in Rhode Island that had already received federal money years earlier for a new office.

The motto of Judicial Watch is “Because no one is above the law”. To this end, Judicial Watch uses the open records or freedom of information laws and other tools to investigate and uncover misconduct by government officials and litigation to hold to account politicians and public officials who engage in corrupt activities.