The White House is in search of a financial bomb squad to sniff out disasters before they blow up in the taxpayers' faces.
The big financial scandals of the 1980s - the savings and loan bankruptcy and the Housing and Urban Development debacle - could have been avoided had there been trouble-shooters watching the numbers in every government agency.Last month, President Bush signed a bill authorizing the hiring of that squad of trouble-shooters led by a "chief financial officer" hand-picked by the president. He or she will operate out of the Office of Management and Budget, backed up by 23 assistants in major federal agencies.
They will stalk those agencies, watching closely for the signs of fraud, waste and abuse. Here are some cases that need their immediate attention.
The Resolution Trust Corp., assigned to sell about $300 billion in S&L assets, needs all the attention that the chief financial officer can muster. The race to pick up the S&L assets at bargain prices is an invitation for fraud and waste. We have learned that the government forgot to factor in the cost of local real-estate taxes that the Resolution Trust Corp. must pay while it still manages the properties.
The Internal Revenue Service has let tax cheats get away with owing the government more than $60 billion. The amount of unpaid taxes has more than tripled in the past 10 years, and there is no sign of a turnaround in that trend.
The Pentagon has $30 million in inventory that it has no intention of using. The mismanagement that created the glut is still in place. For example, the Pentagon bought 40,000 turtleneck shirts for $5 a shirt and then decided not to use them. They were sold at auction to the public for a penny each. The government already has inspectors general in every department, so why can't they do the job without adding another layer in the form of financial inspectors? The inspectors general answered that question at a House Government Operations Committee hearing.
The inspectors general described chaotic bookkeeping procedures that are rampant in the federal government. Health and Human Services Inspector General Richard Kusserow told Congress that agencies must file two separate financial reports - one to fit the General Accounting Office's standards and another to please the Treasury Department. There are seven accounting systems in Kusserow's department alone. Interior Department Inspector General James Richards said that when he came on the job, there were 13 accounting systems in the department and none of them were approved by the GAO.
Commerce Department Inspector General Francis DeGeorge said the inspectors general cannot "go it alone." They desperately need a senior finance officer in each agency policing waste and mismanagement. Sources told our associate Jim Lynch that the likely candidate for chief financial officer is Frank Hodsoll, who is now executive director of the Office of Management and Budget. Some are doubtful that Hodsoll has the technical skills for the job, but his reputation is that of a smooth negotiator and a well-liked numbers cruncher.