Mel Martinez


UnAnswered Questions for Mel Martinez

As a Republican Candidate for Senate in 2004 you will need to convince Florida voters that you are fiscally responsible and can be trusted to represent them and their families. The following questions are intended to help illuminate your performance by "following the money trail" through key areas of your personal responsibility:

As HUD* Secretary (2001-2003)

  1. Why is $59 billion still missing from your Agency, namely HUD[*], and who has the $59 billion?
  2. Even before you took office, HUD was cited by Congress for being financially 'high risk', open to massive fraud and waste. Indeed HUD's own Inspector General testified in 2000 (just prior to your arrival), that HUD could not account for $59.6 billion in the prior year, or more than 50% of its mortgage guarantees in that year. You made little or no effort to investigate, recover the money, or to hold the appropriate staff and government contractors responsible. This has serious ramifications for the citizens of a democracy, as well as for anyone dependent on US financial integrity.

        Links on the Missing $59 Billion:

    HUD is the US Deptartment of Housing & Urban Development

$59 billion missing from HUD!
Where is the money, Mel?

"At the time we discontinued our audit work... An additional 242 adjustments totaling about $59.6 billion, were made to adjust fiscal year 1999 activity."
– Susan Gaffney

HUD Inspector General,
March 22, 2000

In other words,
in a single year HUD could not account for $59.6 billion,
and made 242 "adjustments" to fill in the gaps!

  1. Who is reaping the greatest revenues and profits from HUD?
  2. Please state who is profiting the most from these dealings directly:

    1. Who are the top 10 mortgage banking originators of FHA mortgage insurance?
    2. Who are the top 10 Wall Street dealers in Ginnie Mae securities?
    3. Who are the top 10 managers of Section 8 housing and other private housing subsidized and financed by HUD?
    4. Who are the top 10 buyers and managers of FHA foreclosed properties?
    5. Who are the top 10 developers and owners of Hope 6 public housing deals?
    6. Who are the top 10 homebuilders in the country whose business depends on HUD regulation and FHA financing, either to purchase their homes or the homes of their buyers?
    7. Who are the top 10 syndicators of low income housing tax credits?
    8. Who are the top 10 government contractors running FHA, Ginnie Mae and HUD internal operations?
    9. Who are the top 10 banks that serve as HUD, FHA, and Ginnie Mae depositories and trustees?
    10. Who are the top 10 law, accounting, and lobbying firms providing services related to HUD real estate, mortgage and securities transactions and regulation?

        Links related to HUD Profiteering:

  3. Who is reaping the greatest HUD-related profits on Wall Street?
  4. Please state who is profiting the most from these dealings indirectly:

    1. Who are the top 25 private and institutional investors in the stock of the companies, REITs, and banks described in (4) above, and in the mortgage backed and tax-exempt bonds and tax syndications they issue?
    2. What is the impact on the value of their stock and bond portfolios from these companies' success as a result of their profits from HUD?

        Links related to HUD Profiteering on Wall Street:

    • Securities Industry Association (SIA)
    • Bond Market Association - (formerly the Public Securities Association (PSA)) is the trade association representing the largest securities markets in the world -- the $17 trillion debt markets.
    • Moody's - excellent source for credit ratings, research and risk analysis; tracks more than $30 trillion of debt.
    • Standard & Poor's - provider of independent investment data, valuation, analysis and opinions; tracks $1.5 trillion in investors' assets.
    • EDGAR Online - provides business, financial and competitive information derived from SEC data (i.e. SEC Exposure documents, see Annual Proxies for Large Investor, Board and Senior Management Disclosure).

  5. Who's who in campaign funding and HUD profiteering?
  6. Please state who else is profiting indirectly from these dealings:

    1. How do the top companies, banks, and investors making money at HUD compare to the lists of campaign donors to your campaign, to the Republican Party, to President George W. Bush, and to the soft dollar organizations that support these campaigns?

        Links on Campaign Donations:

  7. The war on "narco dollars" at HUD

  8. Under your leadership at HUD you were the top executive responsible for ensuring that US mortgage markets and the US homebuilding industry are free of "narco dollars" -- i.e. not used for money laundering and financial fraud, including the laundering of the profits of narcotics trafficking:

    1. What is the impact on the value of US mortgage company and homebuilding stocks from the $500 billion - $1 trillion of US money laundering annually?
    2. How would you assess your performance at HUD in preventing such money laundering?
    3. How would you assess your performance with respect to the Florida market, given the size of narcotics trafficking revenues and profits in Florida?

        Links on "Narco Dollars":

    In Tony Soprano's mob world, HUD exists to facilitate embezzlement, theft, and extortion... fiction, or reality TV?

    South Central Los Angeles
    Narco-HUD connection?
    (click for larger image & narration)

  9. Cooked books and back-door privatization
  10. In fiscal years 1998 and 1999, HUD had undocumentable adjustments of $17 billion and $59 billion, and refused to finish its audit in fiscal 1999. Audits for fiscal 2000 and 2001 fail to disclose the amount of undocumentable adjustments made to balance HUD's books. Contractors who had been paid hundreds of millions of dollars to provide the computer systems that were blamed for losing track of this money were not fired.

    HUD has mysteriously operated its defaulted mortgage portfolios at much lower recovery rates than are possible, thus transferring FHA financial resources to private interests in the billions of dollars annually. At the same time it has used elevated recovery rates for purposes of issuing new originations. Given HUD's 'high risk' financial atmosphere, with the FHA specifically cited on the GAO's hotlist of top management concerns governmentwide, the the opportunity for fraud is staggering.

    1. Where is this money going, and who is getting it -- i.e. who is benefitting the most from HUD's failures at financial management?
    2. What is the potential revenue, profits and stock market capital gains that could be generated from $17 billion and $59 billion, as well as several billion a year in back-door privitizations on FHA's defaulted mortgage and foreclosed property portfolio?

        Links on HUD "Cooked Books" and "Piratization":

  11. Lax regulation
  12. HUD is responsible for regulatory oversight of the mortgage government sponsored enterprises, Fannie Mae and Freddie Mac. Freddie Mac is currently under criminal investigation by the Department of Justice related to "cooked books."

    1. Please explain how Freddie Mac could have been cooking the books if its regulator was doing its job.

        Links on Lax Regulation:

  13. Availability of HUD financial data
  14. It appears that HUD's sensitive financial and demographic data can be accessed inappropriately by predatory enterprises, whereas citizens cannot even access routine financial data that is supposed to be made public.

    1. Which companies and banks listed in (1) above have access to confidential government data subject to the Privacy Act as a result of their roles with FHA, Ginnie Mae and HUD?
    2. What steps are taken to insure that this data is not shared with their investors and Wall Street?
    3. What is the value of such data for purposes of insider trading and market rigging?
    4. Why does HUD refuse to make its contract budget publicly available and accessible?
    5. Why are HUD's financials and portfolio not publicly accessible on a place based basis?
    6. Why has HUD taken drastics steps to suppress efforts to provide open citizen access to its software tools and databases on HUD's portfolio?

        Links on HUD IT Contractors:

  15. US Mortgage Bubble
  16. HUD is responsible for the health of the US mortgage market. HUD runs a large mortgage insurance operation called the Federal Housing Administration (FHA), and a mortgage securities operation called the Government National Mortgage Association (Ginnie Mae). HUD also regulates the government sponsored mortgage enterprises Fannie Mae and Freddie Mac (currently under investigation), which effectively underwrite the mortgage market. Anyone can purchase a home loan guarantee that is issued by the FHA and backed by the US Treasury, regardless of their circumstances. If or when they default on their mortgage, their bank submits a claim to the FHA for payment. The FHA is then expected to recover as much of the loss as possible by either selling off the defaulted loan, or foreclosing on the home. To the untrained eye this appears legitimate, since there is theoretically a home purchased in the bargain that serves as collateral.

    However, in recent years the rate of growth for home mortgages issued vs. homes purchased has increased by more than 400.0% vs. 2.5% respectively. This means a significant volume of mortgages is being mysteriously issued with no collateral, creating a virtual mortgage bubble. At the same time, HUD is only recovering roughly 35% on defaulted loans, after cancelling a successful loan sales program that was recovering 70%. In short, the mortgage market is at risk.

    1. Please describe the expansion of Ginnie Mae authorities and powers under your leadership at HUD. As a Republican, please explain why you would promote government agencies competing with healthy private markets and socializing a significant amount of private markets into government.
    2. How does increasing the debt load of minorities, first time homebuyers, and low income people help them achieve the American dream? Wouldn't they be better off with improved skills and competitive access to equity capital to start businesses? Which is more helpful to such communities -- more mortgage debt, or less narcotics trafficking and HUD fraud (including intentionally high default rate policies combined with low recovery rate resolutions)?
    3. What is the total number of Hope 6 units under development during your leadership at HUD? What is the total amount of FHA insurance, low income housing tax credits and tax exempt bonds used to develop these units? How does this flow relate to the US mortgage bubble and stock market. Who were the developers of the two Hope 6 projects at the Orlando Housing Authority, where you served as Chairman? Where else are they the developers?
    4. There are allegations of significant overissuance of tax-exempt single family mortgage bonds using FHA insurance by the Arkansas Development Finance Agency as part of schemes to launder and leverage the state share of profits from the arms and narcotics trafficking at Mena Arkansas during Iran Contra. Has this pattern of overissuance been a concern with Florida state and local housing agencies?
    5. What is the relationship between the US mortgage bubble and the "strong dollar policy"?

        Links on the Mortgage Bubble:

  17. Why does HUD spend $100-250,000 per unit to construct public housing apartments when single family housing can be purchased and repaired in the same neighborhood for $50-100,000?
    And why are felons allowed to develop and manage Hope VI housing while tenants can be evicted for having a felony record?
  18.     Links related to Hope VI Housing Program:

  19. The American Dream Downpayment Act authorizes grants which will help minorities buy homes – will it be the same minorities who were denied votes in 2000?
  20.     Links on the American Dream Downpayment Act:

    The American Dream Down Payment Act, H.R. 1276, was introduced by Rep. Katherine Harris (R-FL) (Co-Chair with Mel Martinez of the Bush Florida Campaign 2000 and Florida Secretary of State whose office purged the rolls of approximately 57,000 minority Florida voters in 2000), and approved in the House of Representatives by a voice vote on Wednesday, October 1, 2003:

  21. Why do you apply opposite standards of personal responsibility – i.e. evicting tenants in HUD housing when their children use drugs, vs. supporting Bush Iran Contra colleagues who deal in or protect hard narcotics trafficking to children?
  22. As Secretary of HUD you were entrusted with over $100 billion per year in appropriations and loan guarantees, and were responsible for HUD's performance both financially and ethically. Yet it appears that HUD and its big contractors were exempted from the most basic standards of performance, integrity, and accountability, whereas innocent people were held to impossible standards and made to suffer severe consequences for not living up to them.

    $59.6 billion in undocumented adjustments was reported missing from HUD just before you assumed office (see UnAnswered Question #1 above), yet you made no discernable effort to clean up the fiscal mess left by the Democrats – you did not demand a complete audit, rigorously investigate, recover the money, or even hold the responsible contractors accountable; under your leadership HUD refused to disclose its undocumented adjustments for subsequent audits, and remains on the GAO's financial "high risk" list, while the FHA (part of HUD) is still on the GAO's top 10 "management challenges." HUD is cooking its books by manipulating recovery rate assumptions and refusing to report undocumented adjustments, and Freddie Mac is under investigation for cooking its books.

        Links on Lax HUD and Freddie Mac Accountability:

    • Freddie, Fannie Escape Action on Hill -- for Now Effort Stalls to Impose New Regulatory System on Giant Mortgage Buyers, By David S. Hilzenrath, Washington Post, November 17, 2003
    • Inside HUD's Financial Fiasco, by Kelly O'Meara, Insight Magazine, June 2001
    • HUD's Financial Woes Continue, by Kelly O'Meara, Insight Magazine, April 18, 2003
    • Major Management Challenges and Program Risks, Government Accounting Office (GAO), January 2001
      FHA: reference High Risk Areas chart (page 31/33) "HUD single family..." which falls under the FHA within HUD
      - HUD Audits: Re: the "clean" audit opinion filed by HUD for FY2000, most federal agencies "have only been able to obtain unqualified audit opinions through heroic efforts, which include using extensive ad hoc procedures and making billions of dollars in adjustments to derive numbers as of a single point in time -- the end of the fiscal year. [...] cannot dependably and routinely produce annual financial statements and other information needed to manage day-to-day operations. [...] do not comply substantially with federal accounting standards or financial systems and other requirements." (page 16/18).
    • Wasted Riches, by Kelly O'Meara, Insight Magazine, October 2001
    • 'High Risk' Finance at the Federal Level, by Kelly O'Meara, Insight Magazine, August 2003

    Under your leadership HUD evicted Pearlie Rucker along with her grandchildren and great-grandchild when her mentally disabled daughter was caught with drugs several blocks from home; yet George Bush's family was not evicted from public housing (the White House) when his daughters were caught attempting to obtain alcohol illegally, nor was Jeb Bush's family evicted from public housing (the Governor's mansion) when his daughter was convicted of a drug crime -- she was instead mercifully sent to rehab and then allowed to return home in spite of violating the terms of rehab [8].

        Links on Pearlie Rucker and the Bush Daughter:

    Summary: Pearlie Rucker lived with her grandchildren and great-grandchildren in public housing; her daughter was stopped blocks away from the site for drunkennes. When searched they found drugs on her person; no drugs were found in Pearlie's home. Perlie and her entire family were evicted. On the other hand, Jeb Bush's daughter was arrested for drug fraud, sent to rehab treatment, broke terms of rehab twice and spent a few days in jail, then was released home to her parents (home being another form of public housing, the governor's mansion). Jeb and his wife and daughter were not evicted.

    Under your leadership HUD refused to pay the $2 million owed to Hamilton Securities for financial services rendered which saved HUD and the taxpayers over $2 billion in defaulted loan sales, and you continued to support the legal persecution of Catherine Austin Fitts, president of Hamilton and former Assistant Secretary of Housing under Bush I.

        Links on HUD Contractor Hamilton Securities:

    Summary: Ervin & Associates and the US Government shut down Hamilton Securities after Hamilton saved HUD $2 billion under a $2 million contract and developed software for citizens to learn about HUD spending by place; they seized the software, bankrupted the company, took it to trial eight years and 18 audits later, and never produced any evidence of wrongdoing.

    And yet, under your leadership HUD has maintained enormous contracts involving access to HUD's most sensitive data with large defense contractors, including AMS (paid hundreds of millions of dollars for installing HUD's faulty accounting system "HUDCAPS," which the HUD Inspector General identified as the primary reason that tens of billions went missing) and Dyncorp (implicated through federal contracts in Eastern Europe in human slave trafficking and pedopholia).

        Links on Criminal Activities of HUD Contractors AMS and Dyncorp:

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