Waste, Fraud and Abuse

Friday, February 17, 2006

BEFORE EVERYONE moves on -- before the focus of the Hurricane Katrina discussion shifts to the role of Homeland Security Secretary Michael Chertoff or reform of his department -- we'd like to keep the spotlight trained just a little bit longer on the "waste, fraud and abuse" that occurred in the aftermath of Katrina, some of which was discussed at a Senate hearing Monday. Much of that hearing focused, rightly, on the identity fraud and other ruses people used to obtain money intended for victims, as well as on documented examples of inappropriate uses of the $2,000 debit cards distributed by the Federal Emergency Management Agency and the Red Cross.

While the Justice Department is, of course, right to pursue these cases, this sort of fraud was predictable (and indeed widely predicted). FEMA and the Red Cross were, in effect, giving away cash, and they were doing so because the public was clamoring for them to do so. While not forgivable, the resulting fraud is understandable.

What we find much harder to understand are the extraordinarily bad decisions made by supposedly experienced government officials who were not under the same extreme pressure to feed, house and clothe hurricane victims in the hours after the storm. Some of these decisions have resulted in massive waste. Exhibit A is the revelation that FEMA purchased 24,967 prefabricated homes at a cost of $857.8 million, and 1,295 modular homes at a cost of $40 million. The Department of Homeland Security's inspector general, Richard Skinner, told the Senate that "it is unclear how the decision was made" to spend $900 million on the more than 26,000 homes. It is clear, however, that almost every penny of that money was wasted, since FEMA's own regulations prohibit the use of mobile homes in flood plains.

As a result, FEMA cannot use the homes in coastal Louisiana and Mississippi, where they are desperately needed. Some have been sent to fire victims in Texas and Oklahoma and to those few flood victims who live outside flood plains. As for the rest -- more than 20,000 homes -- the agency is establishing a staff of "sales personnel" to sell them for pennies on the dollar. They'll be lucky to get rid of them at all. Many of the homes, including nearly 10,000 sitting in open fields near Hope, Ark., are already unusable because they have become warped from sinking into the mud.

Given the acute lack of habitable residences in greater New Orleans and all along the Gulf Coast, how could FEMA waste nearly $1 billion on unusable housing? More to the point: How could FEMA have been totally unprepared to buy homes for hurricane victims, given that the agency makes similar purchases almost every year? The Senate as well as the White House should conclude from this story that FEMA "reform" cannot amount to mere organizational change or undue attention to the overworked question of whether the agency belongs inside DHS. The agency needs some much simpler changes, too: It could start, for example, by learning who made these terrible decisions and relieving them of their duties immediately.

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