Issa, McHenry Call on HUD to Bar Organization from Further Taxpayer-funded Grants after IG Report Exposes Waste and Conflict of Interest

WASHINGTON —Oversight and Government Reform Committee Chairman Darrell Issa (R-CA) and TARP, Financial Services and Bailouts of Public and Private Programs Subcommittee Chairman Patrick McHenry (R-NC) today called on Housing and Urban Development (HUD) Secretary Shaun Donovan to take immediate action to bar the National Community Reinvestment Coalition, from wasting additional taxpayer money.

A recent Department of Housing and Urban Development Inspector General (IG) Report revealed a troubling history of abuse of taxpayer dollars by the Coalition. It also noted a serious conflict of interest involving its work for HUD and found that the group received donations totaling $2.4 million from 10 different banks that it was testing for discriminatory practices as part of a grant for services. The coalition solicited the donations in several cases, contrary to HUD policy.

“The Coalition had a clear disregard for the terms of its grant which were intended to prevent taxpayer funds from being wasted or used fraudulently,” Issa and McHenry’s letter said. “The Coalition pocketed tens of thousands of taxpayer dollars while clearly violating the terms of its grant. …[T]his clear conflict of interest raises questions about whether the Coalition may have used its position as a HUD-endorsed housing discrimination testing organization to solicit millions in funds from banks,” they wrote.

Since 2007, the Coalition has received over $2 million in HUD funds under the Fair Housing Initiatives Program. The IG report examined a $230,000 grant in 2008, which included a provision that prohibited conflicts between a grantee and an organization it was testing.

Issa and McHenry asked HUD Secretary Donovan to prevent additional taxpayer waste by committing to:

1) Requiring that the Coalition repay $59,800 in grant money it spent that the IG deemed “ineligible;”

2) Require that the Coalition return any HUD funds that have been awarded but not yet spent;

3) Excluding the Coalition from receiving FHIP grants, HUD funds, or other federal government funds in the future by taking necessary steps to place the Coalition on the Excluded Parties List?”

4) And, improve the safeguards in the FHIP grant program to prevent future conflicts of this nature.

A copy of the letter is here.

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