▶ 0:22:34that balance. Okay. Good morning. The subcommittee on oversight and investigations will come to order. Without objection, the chair is authorized to declare a recess of the committee at any time. This hearing is entitled Decades of Dysfunction: Restoring Accountability at HUD. Without objection, all members will have five legislative days within which to submit extraneous materials to the chair for inclusion in the record.
▶ 0:23:03I now recognize myself for four minutes to give an opening statement. Today's hearing is entitled again decades of dysfunction restoring accountability at HUD. I would like to thank the acting inspector general for being here today to discuss persistent waste, fraud, mismanagement at Department of Housing and Urban Development. For decades, HUD's IG has investigated, uncovered, and highlighted severe deficiencies plaguing the agency. HUD's core mission is to provide safe and affordable housing.
▶ 0:23:34Something very, very important, and it's something we all support on this subcommittee. However, HUD continues to very often waste taxpayer funds while failing to meet its most basic responsibilities and has little to no mechanisms to track and report these issues. This is a fact. Year after year, HUD's appropriations are squandered, mismanaged, or lost through fraud and improper payments. In 2017, $1.7 billion dollars was lost through improper payments.
▶ 0:24:04And there's no evidence to suggest anything has been corrected or improved. Accountability is in short supply and a lack of transparency has eroded public trust. Yet HUD's spending increased from 45.4 billion to 78.4 billion from 2021 to 2024. Unfortunately, HUD's failures extend beyond the risks of fraud and its inability to track and report improper payments.
▶ 0:24:31The agency relies on outdated IT systems, some design and built in the 1970s, and in turn lacks the data collection processes required for effective oversight. When I served in Pennsylvania as the revenue secretary, we modernized our IT systems and the improvements in tax revenue were so significant, people actually asked what we were doing differently. What was how were things improving so much? It wasn't magic.
▶ 0:24:58It was better data, better oversight, and better decision-making. While HUD faces many challenges, its minimal oversight of programs and grantees also raises serious concerns. Requiring grantees to have a fraud prevention plan as part of the grant application along with enforcing enhanced data sharing across HUD programs would be a beneficial steps towards achieving a more efficient, accountable HUD.
▶ 0:25:25Public housing authorities under the supervision of HUD have operated unchecked without consequence. Many routinely failed to meet basic HUD quality standards with no commitment to improving operations. Requiring such PHAS to timely and accurately report overpayments should be a condition of their funding. Republicans want HUD to provide the most effective housing for Americans as possible. Fraud and overpayments take valuable dollars away from that mission.
▶ 0:25:55One thing is very clear. HUD cannot continue on its current path. Things need to change. That's why I sent a letter to the GAO asking for a report on HUD's improper payments and fraud risk management structure. I believe that with President Trump's uh Doge committee, proper congressional oversight, and Secretary Turner at the helm, a new day at HUD is soon I yield back.
▶ 0:26:23Uh the chair now recognizes the ranking member of the subcommittee, the gentleman from Texas, Mr. Green, for four minutes for an opening statement. Thank you, Mr. Chairman. I thank the witness for appearing and I will add for the record I have great respect for this witness and uh we'll enjoy hearing his testimony. Uh Mr. Chairman, uh I have received a memo uh dated April 3rd, 2025. This is from the majority and I'll read in part what it says.
▶ 0:26:53Says, "This hearing will underscore the critical need for congressional oversight and review by the Department of Government Oversight and Efficiency, Doge, to ensure transparency, accountability, and operational effectiveness within the agency. I regret to inform my colleagues first that Doge is not a department. It is not.
▶ 0:27:18Doge is an entity that replaced another entity that was created by President Barack Obama. It's an administrative agency at best. Doge, which is headed by a employee, Mr. Elon Musk. Temporary because he's there for about 130 days and then he'll be gone. Doge is a temporary entity, not a department.
▶ 0:27:49Some things bear repeating. And I say this because it's important for us to note that the person who is heading Doge has not been elected, has not been vetted. and for Republicans to now decide that they are going to turn the review of certain practices within the department, the housing and urban development department, turn it over to uh a person who is
▶ 0:28:19unvetted, a person who has not been elected is unthinkable. This this hearing should be about whether we should allow Doge to be involved with our government. The hearing should be about whether or not Doge has the authority to do much of what it's doing. The stock market is in turmoil. People are very much concerned about what's happening to them in this country.
▶ 0:28:46Economic uncertainty is pervasive and we have a jester with a chainsaw cutting jobs. And we find ourselves today this very powerful committee, the powerful financial services committee with oversight authority in this subcommittee.
▶ 0:29:04This powerful committee is allowing its very responsibility to be usurped or in fact we are abdicating abdication of the power of the committee to an unelected unvetted temporary employee. Now why are we doing it friends?
▶ 0:29:28I regret to inform you of more because there is fear of Elon Musk. People are afraid of him. They're afraid to take him on. They're afraid to ask him to come before this body, this august body, and give testimony. He should be in that seat. He's the person who's going to make the cuts. He's the person who has demonstrated that he has power beyond that which Congress has accorded him.
▶ 0:29:58He should be here, but we don't have the courage to have him sit in that seat and allow us to ask him questions. Mr. Musk is at best a water-b president who serves with a water-b dictator who believes that he has the power and the authority to literally control not only the executive branch, but also the legislative branch as well as the judiciary.
▶ 0:30:28We at some point have to draw a line in the dirt and say to Mr. Musk, "No more. You can't do this. You can't just willy-nilly, arbitrarily and capricciously cut jobs. You have to do studies. You have to get some insight. And I'd like to ask, Mr. Chairman, at this time that without objection, my memorandum from the majority be placed in the record. Without objection. Thank you. I yield back. Chairman yields.
▶ 0:30:57Chair now recognizes the chairman of the full committee, Mr. Hill, for one minute. I want to thank the acting inspector general for appearing before us today. I want to thank subcommittee chair Muer for holding this hearing. HUD's an important mission providing safe and affordable housing to Americans. Unfortunately, over the years, in my view, the agency has shown time and time again, they are unable to perform even the most basic functions.
▶ 0:31:21The agency continually fails to hold local public housing authorities responsible for not providing safe housing. For example, in my hometown in Little Rock, the Little Rock Housing Authority has allowed the residents of one complex to live in unsafe conditions without electricity while the owners of the complex collect utility payments. It's an outrage.
▶ 0:31:44Additionally, the problems in Little Rock Housing Authority included unauthorized transfers of funds, deceased citizens receiving housing vouchers, and over $700,000 in CARES Act funds unaccounted for, just to name a few. These issues are not limited to one public housing agency. This is a rampant nationwide issue that must be addressed.
▶ 0:32:05And HUS HUD must be able to exercise appropriate oversight of its programs or else billions of dollars of taxpayer uh resources will continue to be at risk of fraud and improper payments. And I look forward to our hearing today. Yield back. Thank you, Mr. Chairman. Uh, the chair now recognizes the ranking member of the full committee, Miss Waters, for one minute. Thank you very much, Mr. Chairman.
▶ 0:32:33Trump and Musk are dismantling the nation's housing agencies and raising housing costs with tariffs on some building materials, while this committee uh pretends nothing unusual is happening. Uh, committee Democrats and I have sent three letters to and requested a briefing from HUD Secretary Turner. I've also asked Chair Hill to invite him to testify.
▶ 0:32:57We have received zero responses or Republicans who have been instructed to not hold town halls anymore, scared uh by what the public uh will think if Turner has to answer for how Trump is running our housing market and economy. Hopefully, my Republican colleagues will uphold their oath to protect the Constitution and the American people. and finally conduct oversight of HUD. I wish I had more time.
▶ 0:33:25I would talk about the entire dysfunction of this government under Trump. All of the recalling that they have to do, the changes they have to made, even our nuclear program uh was at risk uh because they fired the employees and then had to call them back. I could go on and on and on. If you want to talk about dysfunction, let's let's talk about what is happening with this administration. I yield back. Gentle lady yields back. I will now introduce our witness.
▶ 0:33:55Today we welcome the testimony of Mr. Steven M. Beg, the acting inspector general of the Department of Housing and Urban Development. Mr. Beg was appointed deputy inspector general in July of 2020. He previously was the OIG chief of staff and before that was an attorney adviser to the IG's office of legal counsel. Mr. Beg earned his bachelor's degree from James Madison University, his law degree from the Catholic University of America, Columbus School of Law.
▶ 0:34:24Uh we thank you uh for taking the time to be here. You will be recognized for five minutes to give an oral presentation of your testimony. Without objection, your written statement will be made part of the record. Mr. Beg, you are now recognized for five minutes for your oral remarks.
▶ 0:34:43Chairman Muer, Ranking Member Green, members of the subcommittee, thank you for inviting me to testify about the important oversight work that the HUD Office of Inspector General does to detect and prevent fraud, waste, and abuse, and to promote integrity, efficiency, and effectiveness in HUD programs. My testimony will focus on several long-standing challenges that HUD faces and actions that can be taken to address them. HUD's portfolio is massive and its programs affect every community in America.
▶ 0:35:12HUD programs provide hundreds of billions of dollars in grant funding as well as trillions of dollars in mortgage insurance and mortgage back securities. HUD oversees a vast network of participants that administer its programs, including public housing authorities, landlords, nonprofit organizations, state and local government entities, and mortgage lenders and servicesers.
▶ 0:35:35HUD needs a highly skilled workforce, efficient processes, and up-to-date technology to effectively manage a portfolio of this size. In recent years, HUD has sustained progress in key areas like financial management and human capital management. However, we have consistently reported that HUD struggles to maintain the capacity needed to tackle its most pressing challenges.
▶ 0:35:59A common theme across those challenges is the need to modernize HUD's IT systems. HUD needs better data to improve performance and ensure funding is spent properly. The key to collecting and leveraging that data is IT Inadequate systems and lack of data affect many critical HUD program functions like monitoring grantee activities and performance, particularly subreients, preventing duplication of benefits and ineligible
▶ 0:36:29use of funds in disaster recovery programs, and ensuring HUD assisted properties are inspected timely and that the health and safety problems identified are addressed documenting the number of public housing units that contain lead hazards and monitoring the confirmed cases of lead poisoning of children, measuring public housing authority performance in maximizing success rates in the housing choice voucher program, and protecting HUD systems and personally identifiable information from
▶ 0:37:00cyber security threats. HUD IT systems and data limitations also frustrate its ability to identify and prevent improper payments and fraud. For eight consecutive years, HUD has not been able to estimate how many improper payments are made in its largest rental assistance programs because its current systems do not have the payment data needed to test for improper payments.
▶ 0:37:24These programs represented approximately $50 billion in 2024, roughly twothirds of HUD's annual expenditures. Because it cannot estimate and identify improper payments in these programs, HUD cannot develop specific action plans to reduce them, leaving tens of billions of dollars at increased risk each year. HUD needs to collect more information about payments made at the ground level to prevent taxpayer funds from being spent improperly.
▶ 0:37:52HUD can also better leverage data from other agencies such as Treasury's do not pay portal to ensure that payments are not made to those who have been excluded from participating in federal programs or have disqualifying delinquent debt. With better data, HUD can prevent improper payments rather than chase them. The same is true of fraud.
▶ 0:38:12Having better data related to payments and subreient level activities is necessary to target fraud schemes Our office continues to stress the need for stronger fraud risk management practices at HUD. That starts with a commitment to preventing fraud from HUD leadership. In my first meeting with Secretary Turner, he expressed a strong desire to strengthen the department's anti-fraud practices and improve payment integrity and to hold HUD program participants accountable for doing the same.
▶ 0:38:43HUD can put this commitment into action by assessing each of its programs for fraud risks and developing a proactive approach for fraud prevention. HUD should require its program participants to establish fraud risk programs in their organizations and provide guidance to them on how they should manage fraud risk.
▶ 0:39:04Ultimately, reducing improper payments and preventing fraud will better position HUD and its partners to maximize taxpayer funds in achieving the goals and outcomes intended in its programs. The OIG stands ready to assist the department in these efforts. To conclude, I'm proud to represent the dedicated professionals at OIG and I want to thank them for their outstanding effort to help HUD be successful. I look forward to continuing our work with this subcommittee and answering your questions today. Thank you, Mr. Beg.
▶ 0:39:33We'll now turn to member questions and um the chair will now recognize uh himself, myself for five minutes. Uh Mr. Beg, thank you for your very sound testimony and goal oriented. That's very important. This hearing is very important. HUD is very important. Our goal is to improve housing and urban development department, not to uh only to point out the problems.
▶ 0:40:00Although we need to point out the problems, the inherent problems in order to truly focus on where the corrections need to take place, but just keep in mind this is um this is to be constructive so we can actually make a difference moving forward. That's all of our goals. So u Mr. Beg, you're you're speaking quite a bit about modernizing the IT systems at HUD. I do know something about this as as I mentioned earlier from my previous time in state government.
▶ 0:40:28uh can you can you talk about that a little bit more? How will modernizing it improve uh the the effectiveness, the efficiencies and as well as the proper allocation of the allimportant funds to uh those who benefit from the HUD program. Thank you for the question.
▶ 0:40:48um hi-te has as has many potential values but in terms of effectiveness many of the systems as you mentioned were designed a long time ago they don't match the current state of programs they don't capture enough data for HUD to know how well it's performing in its programs and how well its partners are so much of the monitoring effort that HUD has to undertake is manual and the information that HUD receives about how grants are being executed.
▶ 0:41:19Um, it is difficult to to digest for HUD staff. It's inefficient. GAO has pointed out. It's confusing and hard for HUD staff to even read the information that comes through. So, do do you plan on providing us some sort of uh plan on what type of IT system is this something that we can work together on? Absolutely. Because it's very important, I think. And if you wouldn't mind, Mr. Be just just speak up a little bit more if you wouldn't mind or lean in closer to the mic. Sure.
▶ 0:41:44So uh your 2024 report highlights that HUD uh cannot produce reliable estimates of improper payments. This is a real problem because we have over a hundred billion dollars 150 over $200 billion according to the GAO not just from HUD of course but government across the all departments. So you had 2017 the last time a report was done was $1.7 billion uh which after the four years of high inflation 2.2 two billion adjusted for inflation today.
▶ 0:42:14Are we working on something to resume this reporting and if not what is the main barrier to providing such reports? We are working closely with HUD um on finding a solution. The key here is technology and collecting the data. The information that's needed is local rent payment data that's managed um in a distributed way across the nation. HUD has to manually collect it to do that. technology is the is the key to solving that problem. Okay. Thank you.
▶ 0:42:44What penalties for those who have mismanaged funds, fail to report funds, or defraud our government, our taxpayers uh are are being instituted at the present time. The options in terms of penalties uh from a regulatory perspective include HUD can issue corrective action orders that become part of their contracts with housing authorities. they can require them to repay funds with non-federal funding.
▶ 0:43:11With these IT systems and other solutions you have, would that have prevented the theft and corruption at the New York City Housing Authority that led to 70 bribery charges in a single day? Uh did you find that level of prosecution acceptable? The we are certainly pleased with the the prosecutorial results of that uh investigative work which we played a big part in. Um, but to say that technology could solve for that, I I can't I can't say it would go that far, but could go a long way in detecting and giving a chance to prevent.
▶ 0:43:41Okay. Do grantees and public housing authorities currently have to submit any type of fraud prevention plan before receiving HUD funds? I don't believe so. Okay. Is that something you might consider? We would we would see that as very valuable. Okay.
▶ 0:43:57Uh last month I introduced the payment information integrity reform act which requires federal agencies to create stronger financial management plans to reduce payment errors, creates an overpayment zar at the OM and lays out penalties for agencies that consistently fail to follow payment integrity laws. Do you think these changes would u drive faster reform at HUD?
▶ 0:44:19We do and and many of the requirements as proposed match with recommendations that our office and GAO has has made for strengthening federal programs against fraud. So we do great over the past four years. I mentioned in my beginning testimony that went from the um funding from HUD went from 45 billion to 78 billion. Did that did that have any sort of ratio to improvements at HUD?
▶ 0:44:48HUD has made a number of improvements across the board. Um that is a direct result of some of the funding. Um but the funding does increase the risk. My time is expired. Thank you, Mr. Bean. I now uh call on the ranking member of the full committee, Miss Waters, for five minutes of questions. Thank you very much. I'm going to quickly try and get a couple of uh questions in.
▶ 0:45:13Uh could you tell me uh how did DOGE um come into HUD? Did they come in with employees? Did they have a previous meeting? Did they have an analysis of what was going on with HUD? Who did they talk to? And how did they get the records quickly? Uh thank you for the question, ma'am.
▶ 0:45:34It's my understand it's my understanding that um the the HUD Doge lead and and Doge team members have met with many program offices, possibly all of them um in terms of how they've obtained access. I I don't know how those determinations have been made, but I understand that um they are working closely with program staff across the department to How many program officers are you talking about?
▶ 0:46:01I I can't say uh definitively, but it's my understanding that they're they're working with all program offices. And when did that start? Before or after the I I can't say for certain. You don't know? I do not know the specific date. And how did they access the records? It's my understanding that the HUD Doge team personnel um have been assigned to to be employees of HUD and so they can be granted access to HUD systems like any other HUD employ. Who granted access?
▶ 0:46:32I I don't know specifically who granted access. Was there some authorization by HUD personnel for them to do what they were doing? There would have to be an authorization from the system owners at HUD to grant access. Did this authorization take place? I believe so. But do you know so? I I don't know specifically when it occurred or who authorized it. Okay. All right.
▶ 0:46:56So, we don't know how uh they operate uh because it says we understand they had been delegated authorities by HUD personnel to illegally withhold and clone back housing funds appropriated by Congress. Do you know about that? I'm sorry.
▶ 0:47:14Could you repeat that Um, according to court documents, the Trump administration claims that Doge had been delegated authorities by HUD personnel to illegally withhold and claw back housing funds appropriated by Congress. Do you know about that? With respect to the delegations, that sounds consistent with my answer before. That that would make sense that HUD personnel would authorize a dose. It would make sense. Was it done? I'm sorry.
▶ 0:47:44Was there authorization by something somebody some people that would be the process by which I beg you pardon the process by which those personnel would get access to a system would come from an process for example um would they uh talk with um the existing um CEO of of HUD the second in charge the third in charge how does that work I can't say specifically who gave the authorizations the delegations would flow
▶ 0:48:15down from the secretary to senior officials at HUD. Since you have been named, have you investigated what authorizations each doge staffer has been granted and who granted the We have not reviewed that. And whether those grants of authority adhere to federal law, have you examined that? We have not.
▶ 0:48:39Um the lack of oversight of those actions and process is deeply concerning and inherently uh inefficient. So based on what you have learned since you've been there in a short period of time, are you concerned at all about the funding process and whether or not uh those who are eligible for funding the programs all over the country are being uh undermined in some way. We're absolutely monitoring the situation. Uh it's currently in litigation.
▶ 0:49:09We're tracking the situation. We communicate with HUD leadership about it regularly. We're monitoring the situation for sure. What do you plan on doing now in your job? Well, what we focused on right now as decisions are being made is communicating regularly with HUD leadership, career and political staff about the need to maintain capacity across the department.
▶ 0:49:31And I mentioned in my opening statement, capacity has been a struggle for a long time and any adjustments to the programs and the staff should You've served as deput uh uh as deputy for a long time or something uh uh since 2020. Did uh Elon Musk come and talk to you? I have not spoken to Mr. Musk. Did he come to HUD? I have I can't say for sure. I have not seen him in the building. Who did he delegate to talk to you? Uh there's a HUD doge team lead.
▶ 0:50:02I yield back. Gentle lady yields back. The gentleman from Arkansas, Chairman Hill, is now recognized for five minutes. Thank you, Chairman, and again, acting inspector general, thank you for being with us today. As I noted in my opening comments, the Metropolitan Housing Allowance in Little Rock has faced significant financial mismanagement, failing property conditions, and leadership instability for years.
▶ 0:50:29As chairman, ensuring HUD works for the American people and not against the American people is a priority for me. HUD has been long aware of the mismanagement at the Metropolitan Housing Authority, and yet issues persist. How, in your view, should HUD engage with troubled public housing authorities like the one in my district? Thank you for the question.
▶ 0:50:52Oversight of troubled housing authorities is a very challenging endeavor and the best answer to your question is engaging with housing authorities before they become troubled. When housing authorities become substandard, uh really working with them closely to avoid a scenario where they get into a troubled um status because it's very hard to get out of it once you're in it. Yeah.
▶ 0:51:17And so in other words, trying to be proactive at the local office and the regional office in your view is should be a priority. But in your view, has that been a systemic problem at HUD? How troubled how many public houses are classified as troubled by HUD?
▶ 0:51:40I don't have the number off the top of my head, but I don't believe it's a substantial number compared to the the overall footprint of over 3,000 housing authorities, but what you've said about u my view on the topic is is correct. And how should new HUD leadership and every time we have a new HUD secretary, we have a new way to turn the page and do it differently.
▶ 0:52:01If you're advising Secretary Turner, how can he achieve that proactive approach and how could we see better enforcement of housing rules by again the local HUD office versus or a regional office? Well, again, it starts with with systems. Um the the current systems that HUD uses to manage its public and Indian housing portfolio lack key data input inputs.
▶ 0:52:28they rely on self-certification from housing authorities and the information that's available to HUD to monitor them is is challenging to work with. Uh enhancing those systems, getting better data in real time would allow HUD staff a better chance of working with more housing authorities to avoid a scenario where they become troubled because the staff is limited in capacity on how many housing authorities they can really dedicate time to.
▶ 0:52:53And do you find that um HUD's approach in addition to being slow is too differential to the local housing authority to try to solve its essentially try to solve its own problem and therefore they're just letting it fester with the local officials not hearing directly from federal oversight. I don't know if it's differential as much as a true capacity challenge.
▶ 0:53:19there are so many issues uh in the portfolio both in the fiscal conditions of property and then the execution of the programs that I don't think there are enough people to work with all the housing authorities and there's not enough information available to them to do it efficiently but if I told you a particular multifamily housing complex that took section 8 vouchers who was the was routinely failing local property code inspections routinely uh the site
▶ 0:53:50police uh multiple times a week uh pursuing criminal activity and that the local housing authority, the local HUD office consistently let that owner have access to the section 8 voucher program. Would that concern you? Yes, but unfortunately it it it's a common occurrence.
▶ 0:54:13uh the the affordable housing supply is in such a shortage that many times um the HUD staff is forced to try to find alternatives that don't exist and so sometimes the the best option is to try to continue to work out of the scenario. Sometimes they work it out and sometimes they don't. Well, here it was uh an outrage by the local city council when nothing was done at the Metropolitan Housing Authority. Nothing was done at HUD.
▶ 0:54:41Nothing was done at the Fort Worth regional office. And finally, the state attorney general had to take action and pra criminal charges against the land owner in this case. And there was an 11 million dollar judgment. I think that's a situation run a muck. I think all this could have been stopped by just the most basic oversight with bad systems or not. So, we look forward to working with you on how to improve accountability at HUD. I thank the chairman and I yield back.
▶ 0:55:13Gentleman yields. The gentleoman from Georgia, Miss Williams, is now recognized for five minutes. Thank you, Chairman Muer and Ranking Member Green. Under former HUD Secretary Marshia Fudge, y'all HUD's mission was very clear. Create strong, sustainable, inclusive communities and quality, affordable homes for all. So, I'm curious today exactly what part of that mission statement are President Trump and his billionaire buddy against?
▶ 0:55:41Let's start with the part about building strong, sustainable, inclusive communities. How is Trump and Musk building on this with firing so many HUD staff that it can't even carry out its statutory requirements? Trump and Musk are illegally firing hundreds of HUD staff, including Trump's own former HUD inspector general, and closing critically needed field offices.
▶ 0:56:03All of this is happening when I know, just as my Republican colleagues know, just as our witness said today, that we still face a housing affordability and availability crisis in this country. Y'all, this isn't about cutting waste because that's something that we can all agree on. You should see how I pinch a penny in my monthly budget. My husband will let you know and my son who wants to shop all the time, but we just can't. So, we get that.
▶ 0:56:31This is about destroying and dismantling HUD while our communities back home are left to suffer these disastrous decisions of Trump and Trump and Mus that my Republican colleagues are enabling. This is the exact opposite of what HUD was doing under the leadership of Democratic former Secretary Marshia Fudge. So, how about the next part of HUD's former mission statement? Creating quality, affordable homes for all.
▶ 0:56:56With the reckless Trump tariffs, taxing hardworking Americans, and massive cuts to federal housing, the Trump Musk administration is making housing even more unaffordable for folks back home while giving tax cuts to billionaires. The bottom line is Trump is prioritizing his billionaire buddies and personal vendettas over what's right for the household budgets of hardworking American families.
▶ 0:57:19To sum it all up, Trump and Musk are on the track to widen the racial wealth gap and increase housing insecurity for families and communities across the country that we were all sent here to represent. And the only way that we're going to stop this is stop them from making American families pay for billionaire tax cuts is if we expose them. And then together, Democrats and Republicans must demand better from our government. So let's do that today. Mr.
▶ 0:57:47Beg, Elon Musk and Doge gain access to the personal confidential data of the American people through government databases. Doge gained access to HUD's enforcement management system, which contains medical records, financial files, social security numbers, medical details, and the addresses of domestic violence survivor survivors. What controls does HUD have in place to protect the data of the people of America from private entities seeking to exploit the data for their own personal and private gain?
▶ 0:58:18Thank you for the question. Um, in general, the data that you're mentioning is protected from improper disclosure under the Privacy Act. That's the primary uh legal control in place. HUD has a number of information security controls within its information security program that are designed to ensure that that information is not improperly uh released. And Mr.
▶ 0:58:41Beg, who is enforcing That would be the chief information And do you have safeguards in place? Have you been aware that this data is being secured by the chief information officer? We do an annual review of their information security program. So that has not yet been done since January 20th. Uh it it's ongoing.
▶ 0:59:04So it would be our review would include um any and would look to identify any improper disclosures or removals of information from HUD systems. So, that's just one of the many concerns that I'm hearing about from constituents back home since January 20th. Another concern that I'm hearing a lot about is cancel HUD contracts. The city of Atlanta, which is in my district, has one of the widest racial wealth gaps in the country, and many of my constituents rely on HUD to help them just get a jump start. Mr.
▶ 0:59:32Beg, there are multiple fair housing advocates in my district, all of whom have shared concerns about Joe's cuts at the Office of Fair Housing and Equal Opportunity. One example is the Fair Housing Initiative Program's grant termination. On the night of February 27th, 2025, HUD sent notices terminating 78 grant contracts effective immediately.
▶ 0:59:52These council contracts severely impacted communities in their longtime work to enforce the Fair Housing Act, protecting seniors, veterans, survivors of domestic violence, families with children, people of color and faith, LGBTQ plus individuals, underserved rural communities, and other people who've been victims of housing discrimination. Mr. Be, can you speak to the contracts agreements or activities relating to fair housing that have been cancelled or being considered for cancellation?
▶ 1:00:20Um, the cancellations are currently uh subject of litigation and so what we're doing right now is monitoring the litigation to see what the outcome would be. Mr. Beg, I'm sorry. My time has expired, but I will love an answer to this in writing. Thank you, Mr. Chairman, and I yield back. Gentle lady's time is expired. Gentle lady yields back. The gentleman from Georgia, Mr. Louderdermilk, is now recognized for five minutes. Well, thank you, Mr. Chairman. Mr. Beg, thank you for uh being here today. Um, we're in interesting times in this country.
▶ 1:00:49Um, and one thing of the 10 years that I have been in Congress, I have learned is that this city and the government loves status quo. And part of the status quo is a lot of times turning your head to a problem or sticking your head in the sand and uh just ignoring it. But as over the past 10 years, one of my priorities has been finding areas of waste and fraud uh within our government and uh that has been a priority of this administration.
▶ 1:01:19That has upended the status quo and it has a lot of people uncomfortable, but they should be. But one thing that I have learned is through my 10 years in Congress, uh, we've uncovered a lot of areas of fraud and waste, but they still exist today because we're handcuffed by our own laws that we can't get rid of the perpetrators of the fraud and waste because they're protected.
▶ 1:01:42And that's why I've um I have introduced again uh for the sixth or yeah six years now the merit act uh which would reform our employment laws and policies in the federal government to allow for a reasonable time of termination of bad employees not the current 24 to 48 months.
▶ 1:02:06And I just bring that up because uh regardless of what you find or what we find, unless we can get rid of those who are doing these uh waste the wasteful spending of taxpayer dollars, we're never going to do anything. But what this this city is good of is doing oversight and reports and and rarely fixing problems. So Mr.
▶ 1:02:29In fact, HUD Secretary Turner recently announced a creation of a Doge task force to help uncover the waste, fraud, and abuse that uh you know, we all want to get rid of. What is the relationship of this task force to your office and the HUD IG? We have coordinated at a high level with the HUD doge lead and and offered to collaborate on combating fraud, waste, and abuse in the department.
▶ 1:02:54We've offered examples of significant open HUD recommendations that if action was taken on them would generate significant cost savings. And so we we've been uh communicative with the HUD doge team lead and the HUD leadership about our interest in working together to prevent fraud, waste, and abuse. Thank you. Can can you explain the difference between fraud and fraud risk?
▶ 1:03:22Well, fraud is something uh potential fraud and fraud risk is something that can be identified in data, but verifying it and validating it and then adjudicating it in court uh requires human effort beyond just a data So, how severe is a fraud risk at HUD? It's significant. Many of HUD's programs are decentralized in terms of how the money moves. So it moves from HUD to a grantee to a subgrantee to a contractor.
▶ 1:03:53Each time it goes through a layer, the risk of improper payments and fraud increases. So how does that compare with the actual instances of fraud that you've seen? It's it's hard to say. Uh, you know, in some instances we're we're asking to prove a negative here because um we're not able to quantify the things that we don't know about and without uh data sources for us to test against and to really come up with good estimates um which HUD's been unable to do for a long
▶ 1:04:23time, it's hard for us to quantify how much is out there that we're not able to Is HUD responsible for mitigating fraud with its within its programs or is fraud risk management largely de delegated to the public housing authorities? Well, HUD's responsible, we believe, under the law for for managing fraud risk in its programs and responsible for um ensuring that its grantees have strong fraud risk management programs as well. Okay.
▶ 1:04:51Over the years, HUD has struggled to incorporate common sense accountability measures into its programs. Why is that? It's a good question. I think that um the folks who are operating the programs at HUD are doing their best to incorporate, you know, those common sense approaches. Uh but many of the programs are designed for flexibility and anytime flexibility is introduced in the use of funding, it creates opportunities for it to be misused.
▶ 1:05:19It's a it's a difficult balance between flexible grant programs for communities and and trying to put internal controls in place to make sure that the money is spent appropriately. But we think more can be done on the control side. What else can HUD do to mitigate fraud risk? Well, uh the first step like I mentioned is assessing each program for fraud. And this is a basic concept. Just sit down with the people who run the program, get it in front of a whiteboard and say if I wanted to steal from it, how would I do it?
▶ 1:05:48and you'd list it all out. We we could be part of that discussion as well. We we investigate and and help prosecute cases and then think about how can you stop it within your program. What systems do you have in place? What potential controls are there to mitigate it? Test those and start the cycle over again. All right. Thank you. My time is run out and I yield back. Gentlemen yields. The gentleman from California, Mr. Licardo, is now recognized for five minutes. Thank you, Mr. Chair. Uh Mr.
▶ 1:06:14Brake, thank you for coming to testify The purpose the function of your office office of inspector general is fair to say primarily to help identify waste, fraud and abuse so that can be rectified and to ensure the department follows the law in executing its mission. Is that fair? That's correct. I' I'd add to that um we we also have a big emphasis on making recommendations to make programs more efficient and effective.
▶ 1:06:44As part of those recommendations, you present semiannual reports to Congress and uh I think based on your written testimony, quite a lot of work had been done over the last year in fiscal year 24. Um for uh your work resulted I say your work the work of your office resulted in almost 87 million in collections identifying nearly $1 billion in funds that could be put to better use. Is that fair? That's correct.
▶ 1:07:13Um, your investigations resulted in more than $63 million in restitution, uh, more than eight 14 million in total uh, and in 125 administrative sanctions to remove or limit bad actors from participation in HUD programs. That's And you had identified 278 HUD actions um that produce systemic benefits for for the programs and participants and beneficiaries. Is that fair? Yes. Well, thank you for all that great work.
▶ 1:07:43Um, and that work was done certainly not just by you, but by others in the office and of course by your predecessor. I know you're acting, but the predecessor inspector general is Ray Davis. Is that right? That that's correct. The our team at HUD does the work, not me. And and when the executive branch, this case, HUD, does not follow the law. Um, what typically should happen? What are remedies the inspector general is involved in? Well, it depends on the context.
▶ 1:08:13Um, in a in a scenario where someone's not following the law and violating criminal uh provisions, we would work with the Department of Justice to to prosecute bad actors. Um, in an instance where the department might not be following the law, the the Payment Information integrity act, that non-compliance results in reporting requirements to Congress. Um, we publicly report their non-compliance. They're required to work with OM on corrective actions.
▶ 1:08:43So, it really depends on the context, but there is a sanction, there's a consequence. Yes. Now, you became acting inspector general January 24th. Is that right? Correct. President Trump became president on January 20th. Is that fair? Yes. So, you you took this role four days after President Trump took office. uh because Ray Davis was fired by President Trump. That's right.
▶ 1:09:14Now, federal law requires the president to follow a process from terminating inspector general. Uh Senator Grassley, as I understand, a Republican senator, authored an amendment that was approved by Congress uh to mandate that the president provide Congress 30 days advanced notice before terminating inspector general. Is that right? That's correct. and that that notice would include uh written and detailed communication about the rationale for the termination. That's right.
▶ 1:09:43Why would there need to be protections uh in place from the politicization of the termination of an inspector general? I believe the the genesis of those protections was designed to uh protect the independence of offices of inspector general and that independence is incredibly important for you to do your job and detect waste, fraud and abuse, identify conflicts of interest and the like. Absolutely. It's the backbone of what we do. Did the president follow the law in this case?
▶ 1:10:13The the notices were not provided uh consistent with the law. It's my understanding. You know, I know Chairman Hill raised a lot of important issues with regard to poor maintenance at public housing. I think that's been well detailed in the media and I think in every community. Uh there's been a lot of discussion of that. Um that maintenance is paid for by a capital fund. Uh is that right? Yes. And that is allocated by Congress that funding.
▶ 1:10:43Is that fair? Yes. And I believe that the 10 months ago, the National Association of Housing Redevelopment Officials increased its estimate of the backlog of repairs needed for existing public h existing public housing stock from 70 billion to 90 billion and its words, "All due to Congress chronically underfunding the public housing capital fund." Are you aware of that? I am aware of the report and and the figures.
▶ 1:11:08And in your view is the disrepair and poor maintenance while undoubtedly there's plenty of waste fraud and abuse in this agency and any other uh is it primarily the result of waste or Uh the need for funding is certainly an important uh contributing factor in this scenario. the funding has not kept pace with uh the needs and so the critical problems that generate long-term physical condition issues at properties has not been addressed.
▶ 1:11:37So you can paint the mold on the wall but if you don't gentleman's time is expired. Thank you. I yield. Gentlemen yields. Gentleman from North Carolina, Mr. Moore is now recognized for five minutes. Thank you, Mr. Chairman. Uh Mr. Beg, thank you for coming before the committee today. I have a slightly different series of questions than than some of the folks who've spoken already. U back last September, western North Carolina was significantly impacted by Hurricane Helen.
▶ 1:12:04Uh estimates are in our state alone roughly $80 billion in damage. Uh families and businesses lost everything because of where this happened. Uh most folks didn't have any kind of flood insurance of any kind. Um estimates are indicating that it could be around $15 billion dollars uh needed for housing assistance and recovery alone. So just an absolutely immense amount.
▶ 1:12:28I can tell you that after the aftermath, I witnessed, you know, firsthand the resilience of the folks in my district and throughout western North Carolina, our state legislature that I was a member of uh last year stepped up and provided some amazing relief to uh get get funds out there and resources out there to help deal with this catastrophe. And uh I got to say folks in North Carolina stepped out in a significant way to help one another and folks from outside the state, volunteers, you name it.
▶ 1:12:58Uh, one of the questions that kept coming up and and where folks were scratching their head was, you know, the federal response. And I have to say that the federal response prior to this year, uh, was was very lacking, particularly as it pertains to HUD. And on the housing side, a lot of folks were were not being told exactly what to expect. Uh, they were getting, I guess, lack of better word, the runaround.
▶ 1:13:23They weren't they weren't even sure what resources were made were being made available there were folks having their temporary housing potentially going to be cut off. I mean just a lot of really bad things. I do have to say uh that that uh that after the new administration came in a lot of that has significantly improved. Although it's not perfect but it has improved. So we do appreciate that.
▶ 1:13:44Uh but the uh the the the Department of Housing Urban Development uh community development block grant disaster recovery program is going to be a critical part of our of our long-term recovery. U one of the things though that that and I don't fully understand it frankly as a member of Congress is that is the formula that HUD uses to determine the CDBG DR allocations. as far as I know that may not even be public.
▶ 1:14:12And so what I guess that sort of fuels a number of questions. One is what vulnerabilities to fraud or abuse are created by the lack of transparency in this allocation process? Well, with respect to the allocation process, uh I'm I'm not sure that we've studied how it how it contributes to potential fraud, waste, and abuse.
▶ 1:14:36There are a number of uh things that do contribute to that in the disaster program, but we haven't examined the allocation as a as a contributor to that. Well, would you would you believe that it's essential that the CDB uh GDR money is spent in helping these communities recover? Absolutely.
▶ 1:14:55And so in January of 2024, of course this was before your time, uh the HUD OIG launched an audit to determine whether four community development block grant disaster recovery grantees had made improper payments. According to to y'all's office, the grantees have budgeted more than $94 million and had spent almost $356 million on completed and underway match activities.
▶ 1:15:24Why did do you know again this is before your time but I don't know if you had a chance to look why did their spending raise red flags? Well um I I was the deputy inspector general when we launched the audit so I'm I'm familiar with it and the match program allows grantees to use HUD funding to contribute their match portion with other federal programs.
▶ 1:15:51uh the the concern that we have is that HUD doesn't require grantees to report to them or track uh how they use match funds. So where in our examination we've seen instances where if the match requirement is 90% FEMA 10% on the grantee there are instances frequently where we see 90% FEMA 90% HUD and so grantees aren't tracking it. They're not reporting it to HUD.
▶ 1:16:20HUD's HUD's not able to monitor it. The data system doesn't capture it. That That's our concern is that HUD funding is just being wasted above the amount that's been authorized. So So I guess then like what kinds of payments is your office looking to identify and remedy? Uh it would be those that are above the match cap. Those are technically improper payments in our view. Okay. And are you sure the status of that audit? Uh we are in the process of issuing a report in that audit.
▶ 1:16:50We believe it will be in the coming months. We issued a an interim report when we identified the lack of tracking to flag that issue for HUD because we thought they needed to take action on it immediately, but we will be issuing another report on the review soon. Thank you, sir. I yield back, Mr. Chairman. Chairman yields. Gentleman from Florida, Mr. Herodopoulos is now recognized for five minutes. Thank you, Mr. Chairman. And thank you, Mr. Bank, for coming in today. We appreciate your cander and these answers and they we fire them at you right away.
▶ 1:17:20I think the area that I want to get into in the report is the frustration that uh these incidents, let's just say at least of curiosity or concern are usually go unressed. It's got to be frustrating in your role that you make a solid recommendation and no one ever follows up on the darn thing. And I'm I'm excited about what Doge has done. It it it gives even more opportunity to put sunshine on some of these matters.
▶ 1:17:44and and maybe can make your job easier to make sure those reforms are done so the folks who want to buy a house or get in a better living condition can make use of the good programs that are available as opposed to the fraudsters who unfortunately take advantage of the system. So let me ask you a very wide openen question they might have gotten into earlier but um can you give a number estimate how many high priority recommendations still remain open or unimplemented after the recommendations are made by uh your group to HUD?
▶ 1:18:12Yes, we issued our priority open recommendations report for 2024 last year and of the 35 we identified, I believe 24 remain open. We're in the process of updating that report and issuing a new one here in the next coming weeks, but the number will be in that um 2030 zone.
▶ 1:18:33And then and and if you can give a little color to the ones that were quote uh addressed, did we significant savings there or did we see uh arrests made if fraud was conducted? What were the result of ones that were quote addressed? Well, the the recommendations that we're referencing are programmatic in nature. So, we've seen enhancements in information security.
▶ 1:18:55We've seen um HUD's rental assistance program offices take action to clarify guidance to put protocols in place to better track um health and safety issues. It's those types of issues that we're seeing. And and with that in mind too, I I as former business person myself, ROI is what we always look at. You know, what what do you what do you get the most bang for the buck?
▶ 1:19:19And and the idea is that what is there one that some of these recommendations that would yield the most results in twofold. One is of course savings of course we're looking for that given the budget shortfalls but the other one more importantly is to assist folks who truly need it and make sure the fraudsters are kind of uh addressed. Um, but that said, which one of these recommendations would you put at the top of the list where you would get the most benefit so that we can kind of focus on that as opposed to just looking at a number? Uh, your this last case being 35.
▶ 1:19:50Sure. I I'll I'll give a twofold answer since you you posed it two ways. In terms of uh fraud prevention, one of our priority open recommendations is creating um stronger fraud risk management assessments across HUD's programs. If HUD if HUD starts the process of assessing those risks and builds prevention into its programs that would reduce the negative impacts fraud has on its programs.
▶ 1:20:15With respect to financial recoveries, uh we we did a review of how many people obtained FHA insured loans who had delinquent federal tax debt. And in a one-year period, uh, we estimated that $13 billion in FHA loans went to ineligible borrowers with federal tax debt, which would translate, in our view to roughly a $6 billion monetary impact if you factor in the average uh loss rate for FHA on a on a mortgage.
▶ 1:20:45So, taking action to obtain the tax information needed to uh prevent those ineligible borrowers from getting the loans in the first place could have a huge impact on HUD's uh mutual mortgage insurance fund. With that in mind, Mr. Beg, um whose fault was it that that these were approved in the first place? Was it a fraudulent application or was it the actions of the uh folks working at HUD who made a mistake? It's hard to say.
▶ 1:21:12Our review examined uh how many folks with delinquent federal tax debt obtained loans. The reason or the state of mind they had in obtaining those loans. We didn't examine. But what what needs to happen is HUD either needs to obtain that information um and and HUD HUD believes it may require congressional authority uh to get that information from the IRS or it needs to require mortgage lenders to obtain that uh in their review of the applications.
▶ 1:21:41I would just close to this, Mr. Chairman. I I I think the frustration a lot of folks feel is that they feel like the resources are there, the misallocation of funds, put it simply, and and whether it be with Medicaid, HUD, so many vital programs where people are truly in need. It could be the disabled or uh folks folks in nursing homes in the Medicaid world or in this case folks are just getting on their feet and they're doing the right thing. They do it lawfully, but the folks who break the law never suck a penalty.
▶ 1:22:08I mean, at some point when people are either uh knowingly breaking the law and it was shown by fact pattern, we have to put proverbally someone um in handcuffs and say, you know, you're not going to defraud the United States anymore. And I I think that the IG report needs to focus on on the simply who are the worst actors. And if folks are breaking the law, they're denying people benefits, let alone defrauding taxpayers. I'm glad to see you lead this charge, Mr. Chairman, and I appreciate you bringing the witness forth. I thank the gentleman for his comments.
▶ 1:22:38Well assessed. Uh the gentleman yields. I now recognize the gentleoman from Michigan, Miss Talib for five minutes. Thank you so much, Chairman. Um thank you, acting inspector general for being here. I think a lot of us have a lot of questions. Um you know, I come from Detroit, the most beautiful blackest, you know, city in the country. And you know, we used to have 70% home ownership.
▶ 1:22:59I mean, it was one of the most thriving um communities where many of black families would come create careers um out of the auto industry and so much more. So, I I want to get straight at it and and Mr. Beg, this is important for my constituents at home. You know, you're a public servant now. Understand you you really do work for the American people. Even as you have somebody that appoints you, you still have a duty responsibility to the American people, people we represent.
▶ 1:23:27So, under what authority can the administration withhold funding that has already been appropriated by Congress? Uh, thank you for the question. Um, I'm not aware of an authority that an administration would be able to use to withhold funding that's been appropriated by Congress. Okay. So, the Trump administration just uh terminated $60 million in section 4 funding.
▶ 1:23:57Are you familiar with that? So, inspec acting inspector, this funding supports my district. I mean, Grandma Rosedale uh development corporation relies heavily on section 4 funding for years. many of my seasoned residents who are on fixed income, right? As the prices of, you know, the housing crisis just continues to exacerbate, they rely again in organizations like that being able to access that funding.
▶ 1:24:22Section 4 um funding, cancelling section 4 funding threatens hundreds of housing projects around our nation right now. So, you know, it is it is mindboggling though to me, you know, from, you know, Elon Musk and Doge have reportedly called cutting the FHO um uh staff by 77%.
▶ 1:24:43That's from 572 employees down to 134 people because I just, you know, I've been here now going on seven years and one of the things that continues to come out in the previous uh office of inspector general report from 2024 that the primary obstacle to timely completion of any investigations was limited staffing. Limited staffing. And I see that a lot.
▶ 1:25:07I always see people attacking the social security office, attacking the postal service, but when it came down to it, it was about the lack of capacity to deal with the rise of, of course, the need for many of our community members. So, Mr. Beg, if the Office of Fair Housing Equal Opportunity was already struggling to meet its statutory requirements, Mr. Beg, statutory requirements, okay, for the Fair Housing Equal Opportunity was already struggling, right, from existing staff.
▶ 1:25:34How can it effectively uphold fair housing laws the with the face of 77% staffing cuts? A 77% staffing cut uh is significant and as you mentioned we highlighted in our our report uh in our top management challenges report and in our report on u the 100 day investigation. Have you had have you started an investigation into the mass layoffs or the firings? We have not started an investigation related to uh firings.
▶ 1:26:04I think you should find out and and really investigate into the firings and how that impacts your the statutory requirement laws uh for the fair housing equal opportunity uh division.
▶ 1:26:19What I can say we've been doing is communicating with HUD leadership regularly and consistently about the status of the planned reductions and voicing our um advocating for those decisions to be carefully considered and for any decision that's made to reduce HUD's footprint to take into account the need for capacity in each program and the challenges that already exist for capacity. We're having those conversations regularly.
▶ 1:26:46um HUD leadership has been receptive to the information we're bringing to them and we're we're monitoring uh decisions that haven't been made yet in many instances and looking for I don't know my my residents can't stop living like we can't wait we these are programs again appropriated by Congress like I don't understand they they don't have time to be waiting until we can kind of have a good conversation with the administration either follow the law or don't right and I I I say that again we need to move with a lot more urgency and
▶ 1:27:16understanding that laws are being this lawlessness, this recklessness, it will impact our residents. Really quick, you know, in February when Secretary Turner announced the creation of Doge task force at HUD, he charged it with eliminating fraud, waste, and abuse, as you probably are familiar. So, Mr. B, how how are activities not redundant with the activities and purpose of at your office? Isn't that what you do? It is what we do. So, is he doing your job? uh he is not doing our job.
▶ 1:27:45We are so why are we why are we why is Doge trying to do your job right now? I can't speak for the administration or the department or doge. But I just need my colleagues to understand the depth of what's going on here. Uh it's it's reckless and it's it's incredibly hurtful for many families. With that, I yield, Mr. Chair. Gentle lady yields. The gentleoman from Texas, Miss Dea Cruz, is now recognized for five minutes. Thank you, Mr. chairman and thank you for allowing me to wave on to this hearing.
▶ 1:28:16This is a very important topic. Um HUD as a vice chair of housing insurance subcommittee efficiency and um properly fun a properly functioning HUD is of great importance and very important to me in my district. Um HUD housing is something that we have in in all of my district.
▶ 1:28:41efficiency um identifying fraud, waste and abuse as you have done so and thank you for your very candid response. In fact, some of the things that I heard is that you and your team have identified several areas where we can cut back on fre fraud, waste, and abuse.
▶ 1:29:03What was concerning to me is that you had in 2025 high priority items, 35 of them, which at the end of the year 24 approximately were still were still open.
▶ 1:29:17When I looked at your office and the fact that the IG had not been the IG had not been forced to testify in front of Congress um and that it had been 5 years since we had heard from your team about the fraud, waste, and abuse. I thought to myself, well, that's just unacceptable.
▶ 1:29:45As a small business owner myself, I regularly have meetings with my employees to say, "Where are you at? What is the temperature? What challenges are you facing? How can we help?" And this is when I decided to create something to help us. One of my bills focused on preventing fraud, waste, and abuse at HUD is noticed in this hearing.
▶ 1:30:10It is HR225, HUD transparency act of 2025, which last Congress passed with overwhelmingly support um from both sides of the aisle and it passed by vote voice vote on the House floor. The bill is really simple. It requires the HUD office of inspector general to testify annually before Congress. Again, very important.
▶ 1:30:36The need for this legislation is underscored by the fact that the HUD Inspector General's office again hadn't testified since 2023. Uh Mr. Beg, a having hearing you today, having you here today and listening uh to what you have said furthers my resolve for the need for this bill.
▶ 1:30:59So my question to you is as acting HUD IG, can you speak about the impact that pointed congressional attention in the form of a required annual HUD OIG testimony would have on HUD and the OIG's mission to help prevent fraud, waste, and abuse? Thank you for the question. We welcome the opportunity to come before this committee and and our other committees of jurisdiction uh as requested to provide testimony.
▶ 1:31:30We uh are thrilled to have an opportunity to talk about the important work our staff is doing and also stress the need for uh actions that can help HUD be more successful. So, do you feel that by coming here on an annual basis and bringing your concerns to our our um our committee that that will help further support the need to stop the wasted abuse and give you the tools that you need? I do. Excellent.
▶ 1:32:00Thank you. The last um question that I have in the short minute is I also introduced another piece of legislation which is ensuring access to the whistle protections act to provide whistleblower protections for employees of HUD contractors with contract with contracts pre-dating 2013 section 4712 the anti- retaliation provisions.
▶ 1:32:25I know this is one of the first topics that you mention at the top of your uh management challenges report in FY25. So can you briefly share with us how important whistleblower protections are to help preventing fraud, waste, and abuse at HUD? Whistleblowers are critically important for identifying fraud, waste, and abuse.
▶ 1:32:50and the thousands of contractors um that HUD utilizes have many thousands of employees who have direct knowledge of and access to information that we would want to know about fraud, waste, and abuse. Ensuring that they're free from retaliation is key so that they they feel protected to come forward. Uh without those protections, the chilling effect on them disclosing information that's critical to improving HUD programs is significant. Thank you so much. I yield back.
▶ 1:33:20Thank you. Gentle lady yields. Gentleman from Wisconsin, Mr. Style, who is also the chair of the subcommittee on digital assets, is now recognized for 5 minutes. Thank you very much, Mr. Chairman. Thank you for holding today's hearing. Mr. Beg, uh, thanks for being here. I want to talk to you about uh the waste, fraud, abuse that's occurring in Milwaukee, Wisconsin.
▶ 1:33:40Uh, as you may know, uh, $2.8 8 million in rental assistance funds went to other purposes, went to payroll, uh to oversight, to administrators, not to helping people in the city of Milwaukee get housing, many of whom are challenged. Uh we face national challenges with housing right now. Uh but I want to talk about what went on. We have a new CFO at the Milwaukee Housing Authority, uh who I know is engaged in this and trying to get this back on track.
▶ 1:34:08But what are the consequences uh for individuals who caused the problem? And what is the consequences across the board at HUD? Are people arrested? Are there charges made? What are the penalties? And how did this occur for years in the city of Milwaukee uh before this came to light? Well, thank you for the question. We're uh acutely aware of the scenario Milwaukee. It's one we've been tracking and it's one that we've considered doing our own oversight over. Uh and quite frankly, it's it's a crowded room there.
▶ 1:34:36There are many many people looking at this issue now based on the the status. But in terms of penalties, if if employees of a housing authority are found to have misused federal funding, uh we would investigate those potential crimes and refer them for prosecution. We would work with HUD's um office of general counsel to seek to debar them from federal programs. Um, and we would uh seek any other potential administrative penalties for others involved in in in the actions.
▶ 1:35:06I appreciate you eng you engaging on this uh in being serious. I think the the new administration, the Trump appointed administration at HUD, we have a big opportunity to get to the bottom of the waste, fraud, and abuse because what we want to do is actually help people uh who are challenged and need the assistance. What we don't want to see uh is it going into programs that it's not designed for. But walk me through how no penalties came to be over the course of 3 years in particular as it relates to the 2.8 million in misused funds.
▶ 1:35:37Uh the Milwaukee Housing Authority. Well, if you're referring to penalties from HUD, I I can't speak to their specific decision-m, but they do have uh penalties and remedies available to them which include can include limiting and withholding assistance to housing authorities. And at what point does HUD apply those penalties? That's a discretionary uh function for the program offices to decide. It's a it's a policy call for them.
▶ 1:36:02Ultimately, in many instances, they will try to work with housing authorities to get out of um troubled or or difficult situations where things aren't going correctly before going to the penalties because I I mentioned earlier there aren't a lot of non-federal funds available from housing authorities to pay penalties.
▶ 1:36:20So if you withhold new funding from them, it we we enter a catch 22 once there's a bad problem, which kind of bring brings the question of how problems like this stem and grow over a period of years before they're caught. Um is there an unwillingness, do you think, in some housing authorities to correct bad I wouldn't say that. What I what I would say is that many housing authorities are facing the same capacity challenges that that HUD and its staff are facing.
▶ 1:36:48They frequently don't have uh adequate systems in place. They might not have processes in place necessary to run efficiently and effectively. And they have a large charge and and frequently it's one that's difficult for them to manage. So the the problems snowball over time, but it seems to me at least that that HUD appears asleep at the at the wheel uh while this is ongoing in the city of Milwaukee that this isn't being covered and held accountable because you're exactly right. the longer it takes for this to come to light.
▶ 1:37:17These penalties are simply pulling money back from a system that doesn't have it because the money was swindled in the first place, which puts us in a catch22 and shows the need to investigate this and hold people accountable uh in the first place. Let me go big picture because I think one of the questions is are the people who are engaged in this inappropriate behavior nervous of being caught? How often is HUD applying penalties? Is HUD arresting people making charges uh across the board to housing authorities across the United States when they see this type of waste fraud and abuse?
▶ 1:37:48Well, what I can tell you is our office is responsible for doing the criminal investigations and um almost half of our portfolio is dedicated to public corruption in these programs. Uh we how often are people actually held accountable? I we could point to um investigative case outcomes, prosecutions, sentencing uh weekly. It happens all the time and and in many ways we're only uh scratching the you know tip of the iceberg.
▶ 1:38:16That that's my concern is we're only scratching the tip of the iceberg. Your words that's my concern uh is that we're not taking this seriously enough to root out the waste fraud and abuse because every dollar that is wasted inside HUD is a dollar that's not going to improving the housing or providing access to individuals who do need housing. Appreciate the work you're doing at HUD and others uh to root out this waste, fraud, and abuse. Mr. Chairman, thank you for holding the hearing. I yield back. Gentleman yields. Gentleman from New York, Mr. Garberino, is now recognized for five minutes.
▶ 1:38:46Thank you, chairman. Uh, thank you, Mr. Meg, uh, for for coming here today. 2024 was a record setting year for the New York City Housing Authority. Not just, but it was just for the right reason. In February of 2024, 70 NICHA current and former superintendent and staff were arrested for allegedly pocketing bribes in exchange for granting no bid or microcontract repair work.
▶ 1:39:09This 10-year $2 million classic payforplay corruption scheme was the largest number of federal bribery arrests brought in a single day in DOJ history and included public housing employees at developments in every burrow. The employees had the power to hand out smaller microurchase contracts of $5,000 which increased to $10,000 after 2019 that fell below the amounts that triggered competitive bidding. The contractors would then pay kickbacks to NICHA employees who awarded the contract. Mr.
▶ 1:39:38Beg, following this incident, your office released a report examining NICHA's findings. Its mitigation processes are reactionary. NICHA is the largest public housing authority in the United States. That's correct. And NICHA receives billions in federal funding from HUD each year. I believe over three billion. In fact, NICHA receives over 25% of HUD's rental assistance funding nationwide. Correct.
▶ 1:40:05Yet, the report found that NICHA did not assess fraud risks across the entire organization. In fact, NICHA did not develop a process to identify fraud risks. It did not develop a response plan and it did not implement a process to monitor and evaluate the effectiveness of fraud risk management activities. As the largest public housing authority in the United States, one would hope that they would be more organized or better organized. Mr. Beg, I understand that uh it varies amongst housing authorities.
▶ 1:40:35I worked at a law firm before I came to Congress that represented housing authority. We did not have this problem. Uh but I would say that uh would you venture to say that these failures are common across other public housing authorities? I and with respect to NICHA uh it's a sophisticated organization. They have many things that are in place. They have um a lot of anti-fraud activities that are are happening across their their programs.
▶ 1:41:03they're just not structured in a way that's coordinated uh across the the organization and proactive. And so in many in in many instances, they're actually farther along than most housing authorities. They're leading the pack, but they still have room to go. So we we do think that these issues are very pervasive at other housing authorities. That's that's kind of scary that you said that the further along than other housing authorities, but there's this is still happening uh still happening there. It just happened last year.
▶ 1:41:33Um what can HUD do to provide more guidance when it comes to mitigating public housing authority uh fraud risk? Well, first um they need to assess the risks in each of the programs that housing authorities operate.
▶ 1:41:47HUD needs to do that and identify what it sees fraud risks as and then require housing authorities to have anti-fraud programs that meet the standards u that GAO's established for federal programs and then give them guidance on on how to meet those expectations and work with them to strengthen those anti-fraud controls over time.
▶ 1:42:08Would do the fraud risk vary by size of of a housing authority or like is it what is is it if they do an assessment is it does one cover NICHA all the way down to a small town housing authority or how does they do they do vary uh depending on the size um and we recommended in that report that u PIH assess fraud risks at large housing authorities like NICHA um the the no bid contracts that you mentioned in a large organization where there many
▶ 1:42:38of them happening all the time. It is hard to oversee low dollar contracts. Um but if you're in a small housing authority that may have only a handful of people, you're not going to have that kind of um traffic. At the smaller housing authorities, the issues are usually a lack of segregation of duties. One person controls the money and the accounting and so there's no one to know whether it's gone missing. Thank you.
▶ 1:43:03And then so it sounds like it sounds like a a lack of formal guidance is a factor in uh from lack of formal guidance from HUD is a factor uh in this risk of uh of uh fraud. Um how often does HUD terminate or suspend funding due to underperformance or fraudulent activity? I don't have the answer to that off the top of my head. Be be happy to get back to you on that. I have my last question. public housing authorities have a governance structure.
▶ 1:43:33Uh should there be reforms or the makeup of those boards that could result in a more or more competent or effective board? I think that depends on the the context in terms of of governance, but um I I know that governance structures across the the PHA space have been a challenge. I'm out of time. Thank you very much for being here today. I yield back. Thank you. Gentlemen yields. The gentleman from Texas, Mr.
▶ 1:44:00Green, the ranking member of oversight and investigations, is now recognized for five minutes. Thank you, Mr. Chairman and friends. For reasons that I shall not announce, I believe the chairman to be an honorable person, and I want to make that a part of the record today. Uh, Mr. Begs Beg, excuse me.
▶ 1:44:27Are there people in this country who engage in invidious discrimination when it comes to housing? Uh, yes. And do these people engage in a form of invidious discrimination that would deny a person access to housing because of color? Yes.
▶ 1:44:52And is there a department within HUD that deals with this invidious Yes, the Office of Fair Housing and Equal Opportunity. And have you heard, sir, that there is a possibility of substantial cuts in personnel in this department? Yes. Have you heard a number, sir?
▶ 1:45:19We I've seen the reporting uh and I think it was mentioned earlier in the hearing uh 77% was a was a possibility. And if 77% of the persons charged with enforcement are removed from their positions, what would this portend for people who are seeking housing without being discriminated Well, we discussed the already strained capacity in
▶ 1:45:49that office earlier. So, a significant cut could increase the strain on capacity. Um, what we would want to see uh in a plan is how HUD plans to account for that reduce staff. What other tools or alternatives would it use to to prevent the capacity from going too low that it it can't perform its programmatic function? You mentioned a plan. Have you been been presented a plan? I have not.
▶ 1:46:20If I wanted to know the plan, would it be judicious to ask you or Mr. Musk if I assume that one of you has knowledge of the plan? Which of you would be better to answer the question about the plan? Well, HUD's in the best position to answer what's in its plan. And it it's my understanding that the plan has not been finalized in many respects yet. But if I wanted to know the plan that Mr.
▶ 1:46:47Musk has that you have not been given, would it be better to ask you or Mr. Musk? I wouldn't be able to speak to the plan. So I believe Mr. Musk. And if I want to know about the cuts that he has in mind, would it be better to have you tell me or Mr. Musk? I think the same answer applies, sir. I think you're right, sir. And I ask the question because it's my belief that Mr. Musk should be here to talk about the cuts.
▶ 1:47:15Uh there's more involved in this than technology. We're talking about laying people off in significant numbers and I don't think you're in a position to tell us what Mr. Musk plans to do uh with reference to these layoffs. I contend that he should come before this committee.
▶ 1:47:37There has been some indication that you should be here or some person in your position should be here on an annual basis. Well, if Mr. Musk is a temporary employee, he's only going to be on the job about 130 days max and then maybe he'll be reinstated at a later time.
▶ 1:47:57But it would seem to me that that temporary employee who has this awesome amount of authority, he ought to come and sit in seat and explained what he plans to do to the lives of these people. I don't ask you to answer anything in response to that or make any comment. I'm just I'm just concerned about the way we're doing business.
▶ 1:48:21I am I'm concerned about how we are literally abdicating our responsibility. I'm concerned about the country. Uh we we we should know that a democracy, a republic if you will, but a democracy, this is a methodology by which you can get people in office. A de democracy is not inexpensable.
▶ 1:48:51It's not invictus. A democracy is a work in progress. And every time we allow a chipping away, we are diminishing some aspect of our democracy. The democratic way to deal with this would be to have Mr. Musk come before the committee. He knows the answers. And I yield back and I thank you, Mr. Chairman. Gentlemen is back. The gentleman from Nebraska, Mr.
▶ 1:49:18Flood, who is also the chair of the subcommittee on housing and insurance, is now recognized for five minutes. Thank you, Mr. Chairman. Inspector General Beg, as the chairman of the housing and insurance subcommittee, I have significant interest in the operations of HUD and their efficiency. We need to ensure that HUD has strong processes in place to track funds once they're dispersed and prevent waste, fraud, and abuse. And I appreciate your work in outlining some of the key challenges with the agency.
▶ 1:49:46I'd like to focus on one program you mentioned is needing greater oversight. That's the CDBG disaster relief program. Given the prevalence of several large weather events and increased congressional uh conservation on uh conversation on DR funding, additional financial support, can you speak to the oversight challenges that persist at the block grant and subgrantee level for DR Uh thank you for the question.
▶ 1:50:15Um as you mentioned, disasters are occurring more frequently and they will continue to occur more frequently. This program has grown exponentially um in recent years and the HUD systems and processes in place were not designed uh to oversee the DR program in the in the same way that it was designed to see the regular CDBG entitlement program. Um the department's done many things to try and and make up for that gap.
▶ 1:50:44um the the universal notice that they published um helped streamline the processes and and HUD's done everything within their control that they can to try to tighten up the timeliness in which uh funding flows out.
▶ 1:50:57Um but the system limitations and the lack of a regulatory statutory framework for the program still create a lot of risks in terms of what data is available to know whether it's working and how can we be sure that the streamlining is going to be in place when it can change over time if it's a simply a HUD notice. So is HUD in your opinion do they have like a robust fraud waste abuse management effort to make sure those things aren't happening?
▶ 1:51:25Is there a system in place to ensure these dollars aren't being wasted in the in the disaster recovery program? We think they have room to improve. U the community planning and development program office does have a a fraud risk specialist. Uh they have expressed interest in working with us more on fraud risk, but they still have not assessed their particular fraud risks in that program and then come up with corrective actions to to mitigate those and required grantees to do the same.
▶ 1:51:55So taking those first steps are are really key in our opinion. So in your prior testimony, you highlighted an instance where the Puerto Rico Department of Housing did not implement sufficient fraud risk management processes on 20 billion of HUD funding they received for disaster recovery and mitigation. It's remarkable to me that $20 billion could be awarded if the grantee doesn't have basic processes in place around managing fraud risks.
▶ 1:52:23Uh I think you've answered this question but there is there a need for uniform processes around fraud risk management and more importantly would congressional authorization of the CDBG DR program be helpful in potentially establishing some uniform requirements for dealing with fraud. I think the answer to both is yes.
▶ 1:52:44um permanent authorization uh is not necessarily a silver bullet to all the challenges in the program but it would help in going a long way to standardize and reduce the variance in programs which it does in fact contribute to the fraud risk. Have you ever put together kind of some guidelines or ideas about what that authorization should look like from the DR perspective? Uh we've worked uh with various members over the years to provide technical assistance. We'd be happy to work with your office in doing that. I would encourage you to reach out to Mr.
▶ 1:53:14Blemptus in my office because uh this is something I want to focus on and I think uh the ranking member also knows it's an issue. Moving to the home investment partnership program, the ranking member, Mr. Clever and I are working on uh reauthorizing that. Have you and your work seen any challenges unique to oversight of the home program that you'd like to highlight? Um many of the challenges that we've seen uh with respect to home are kind of common grants management challenges.
▶ 1:53:42Um limitations they more kind of standard that we see across CPD programs. What I can say is we know that the home program is incredibly important to the stakeholders and the flexibilities it provides in creating solutions is is very valuable. Thank you very much for your testimony and for your work on behalf of the American people. And with that, Mr. Chairman, I yield back. The gentleman yields.
▶ 1:54:09Seeing that we're ready to adjourn, I'd like to thank our witnesses witness our only witness for your testimony today. Without objection, all members will have five legis legislative days within which to submit additional written questions for the witnesses to the chair. The questions will be forwarded to the witness for their response and I ask our witnesses to please respond no later than May 13th,