During a House Financial Services Committee hearing prior to the congressional recess, Rep. Barry Loudermilk (R-GA) questioned Stephen Begg, the Acting Inspector General of U.S. Department of Housing and Urban Development, about mitigating fraud risk.
Category
🗞
NewsTranscript
00:00Lady's time has expired. Gentle lady yields back. The gentleman from Georgia, Mr. Loudermilk,
00:04is now recognized for five minutes. Well, thank you, Mr. Chairman, Mr. Begg. Thank you for
00:08being here today. We're in interesting times in this country. The one thing of the 10 years that
00:16I have been in Congress, I have learned is that this city and the government love status quo.
00:22And part of the status quo is a lot of times turning your head to a problem or sticking your
00:28head in the sand and just ignoring it. But as over the past 10 years, one of my priorities has been
00:34finding areas of waste and fraud within our government. And that has been a priority of
00:42this administration. That has upended the status quo, and it has a lot of people uncomfortable.
00:48But they should be. But one thing that I have learned is through my 10 years in Congress,
00:53we've uncovered a lot of areas of fraud and waste. But they still exist today because we're handcuffed
01:00by our own laws that we can't get rid of the perpetrators of the fraud and waste because
01:05they're protected. And that's why I have introduced again for the six or six years now, the Merit Act,
01:15which would reform our employment laws and policies in the federal government to allow
01:23for a reasonable time of termination of bad employees, not the current 24 to 48 months.
01:30And I just bring that up because regardless of what you find or what we find, unless we can get rid
01:36of those who are doing these waste, the wasteful spending of taxpayer dollars, we're never going to do anything.
01:44But what this this city is good of is doing oversight and reports and and rarely fixing problems. So,
01:54Mr. Beck, HUD Secretary Turner recently announced a creation of a DOGE task force to help uncover
02:00the waste fraud and abuse that, you know, we all want to get rid of. What is the relationship of this task
02:06force to your office and the HUD IG? We have coordinated at a high level with the HUD DOGE lead
02:14and offered to collaborate on combating fraud, waste and abuse in the department. We've offered examples
02:21of significant open HUD recommendations that if action was taken on them would generate significant
02:26cost savings. And so we've been communicative with the HUD DOGE team lead and the HUD leadership about
02:34our interest in working together to prevent fraud, waste and abuse.
02:38Thank you. Can can you explain the difference between fraud and fraud risk?
02:46Well, fraud is something potential fraud and fraud risk is something that can be identified
02:53in data, but verifying it and validating it and then adjudicating it in court requires a human effort
03:00beyond just a data exercise. So how severe is a fraud risk at HUD?
03:05It's significant. Many of HUD's programs are decentralized in terms of how the money moves.
03:12So it moves from HUD to a grantee, to a subgrantee, to a contractor. Each time it goes through a layer,
03:19the risk of improper payments and fraud increases. So how does that compare with the actual instances of
03:25fraud that you've seen? It's hard to say, you know, in some instances we're asking to prove a negative
03:33here because we're not able to quantify the things that we don't know about. And without
03:40data sources for us to test against and to really come up with good estimates, which HUD's been
03:46unable to do for a long time, it's hard for us to quantify how much is out there that we're not able
03:51to see. Is HUD responsible for mitigating fraud within its programs or is fraud risk management largely
03:59delegated to the public housing authorities? Well, HUD's responsible, we believe, under the law
04:05for managing fraud risk in its programs and responsible for ensuring that its grantees
04:12have strong fraud risk management programs as well. Okay. Over the years, HUD has struggled to
04:17incorporate common sense accountability measures into its programs. Why is that?
04:22That's a good question. I think that the folks who are operating the programs at HUD are doing their
04:31best to incorporate, you know, those common sense approaches. But many of the programs are designed
04:36for flexibility. And anytime flexibility is introduced in the use of funding, it creates opportunities for
04:43it to be misused. It's a difficult balance between flexible grant programs for communities and trying to
04:50put internal controls in place to make sure that the money is spent appropriately. But we think more
04:55can be done on the control side. What else can HUD do to mitigate fraud risk? Well, the first step,
05:03like I mentioned, is assessing each program for fraud. And this is a basic concept. Just sit down with the
05:08people who run the program, get it in front of a whiteboard and say, if I wanted to steal from it,
05:12how would I do it? And you'd list it all out. We could be part of that discussion as well. We
05:17we investigate and help prosecute cases. And then think about how can you stop it within your program?
05:23What systems do you have in place? What potential controls are there to mitigate it, test those,
05:28and start the cycle over again? All right. Thank you. My time has run out. Now you'll be back.