By: Jennifer I. Curtin, MPA
AGA’s Seventh Annual National Leadership Conference began
with Gene Dodaro, CGFM, Acting Comptroller
General, U.S. Government Accountability Office (GAO). He focused on the challenges
facing the new administration and the 111th Congress. He told
attendees that GAO has a unique responsibility as a resource to its primary
client, Congress.
In preparation for the incoming Obama administration, on
Nov. 6, GAO published a new section to their website that proactively lists
distilled reports to help triage the issues facing the U.S. The new site is
available 24/7 in different formats. It conveniently sets up the urgent issues
for the Obama administration. You can view the information by federal
department or in a government-wide format. Dodaro's team constructed a list of
suggested cost-saving opportunities for the administration to review.
GAO also identified urgent issues that include: financial
regulatory markets and institutions and modernizing the federal regulatory
system. Since the current regulatory system is ill-suited to meet U.S. needs,
Dodaro suggested goals to solve the issues: reform has to be set in clear
regulatory goals; we need to deal with the gaps in the system; offer a
system-wide focus; manage risk proactively and offer consumer protection.
GAO has ongoing
responsibilities to provide onsite monitoring of the Emergency Economic
Stabilization Act of 2009 which created the Troubled Asset Relief Program
(TARP). As a result, they have already made nine recommendations to increase
accountability and transparency. Dodaro also offered a list of the urgent
issues that need to be prioritized within congress and the Obama
administration: updating strategies for all missions attached to Iraq,
Afghanistan and Pakistan; homeland security; fragmented food safety; improving
the U.S. image abroad and the transition to digital television.
An alarming figure that Dodaro offered involved an estimated
$72 billion in current improper payments in government. He stressed that the
government needs to stop those payments from occurring. In general, cost
information needs to be in better shape before handing it over to Congress for
review. "We are at a critical juncture in the U.S. and I look forward to
working with this government financial management community moving forward to
help improve our nation.”
James B. Lockhart III, Director, Federal Housing Finance
Agency
On Feb. 18, President
Barack Obama threw a $75 billion
lifeline to millions of Americans on the brink of foreclosure, declaring an
urgent need for drastic action—not only to save their homes but to keep the housing crisis "from wreaking even greater
havoc" on the broader national economy.
The lending
plan, a full $25 billion bigger than the administration had been suggesting,
aims to prevent as many as 9 million homeowners from being evicted and to
stabilize housing markets that are at the center of the ever-worsening U.S.
recession.
Government
support pledged to mortgage giants Fannie Mae and Freddie Mac is being doubled
as well, to $400 billion, as part of an effort to encourage them to refinance
loans that are "under water" — those in which homes' market values have sunk below the amount the owners
still owe. As a result of this information, Lockhart offered timely remarks to
attendees.
“It is very
important to have sound financial systems,” he stated. “You are the heart of
the government.” The key to managing financial programs is to conduct a
root-cause analysis. The key way to reduce risk is to have strong oversight and
the biggest challenge that the U.S. faces is the stabilization of the market.
Fannie Mae
and Freddie Mac must exist to support the housing market. They have a majority
of the market share. They buy mortgages, package them, protect them and offer
them back to the public. Ashworth told President Bush during his final days in
office that the Housing and Economic Recovery Act that was signed on July 30,
2008 was two years too late. Fannie and Freddie
financed or guaranteed nearly three quarters of new home loans last year.
They were seized by the government in September and put
under the conservatorship of their regulator. At the time, the Treasury pledged
to prop up the companies with up to $100 billion each to keep them solvent.
Lockhart realizes that the big question on the minds of
most is "how did we get here?" Following the 2001 recession, low interest rates
flooded the mortgage industry encouraging a boom in new and existing home
sales. The three main vulnerabilities were: prices of homes rose, builders
built too much; risk was mis-priced across the market (interest-only loans,
adjustable arm mortgages, etc.);
and there was a total failure of due diligence from bond insurers.
Currently, Lockhart estimates that there are 55 million
mortgages. Out of those 55 million, 30 million are guaranteed by Fannie or
Freddie. More than 90,000 letters have been sent out encouraging people to modify
their loans. Lockhart’s organization understands the human tragedy behind
foreclosures and will all that it can to prevent those from occurring. The $75
billion offered earlier this week to home owners should show signs of
significant reductions in foreclosures by March.
Rep. Jim Moran (D-VA) and Tom Davis, Director, Federal
Government Relations, Deloitte
Panelists Jim Moran and Tom Davis offered a candid and
frank discussion about a variety of current issues. “Partisanship stops after
election day in local and state government, but at the federal level it never
ends,” commented Davis. The issues and politics facing our country are very
difficult now and we need to be inclusive and walk across the aisle to get them
fixed.
Both pointed out that there is a lot of energy to make a
transformative administration and agenda in Washington right now. “Republicans
aren’t rooting for the economy to collapse, but they like to tell you 'I told
you so’,” stated Davis.
Moran suggested that Congress needs to focus on: a change
to Medicare, national energy distribution (wind, sun), entitlement reform is
critical, human capital and they must figure out a way to provide health care
for every child. “We need members that can make tough votes, there is nothing
wrong with losing office for the right reasons,” said Davis. “We need to get
rid of Potomac fever.”
Ernest Almonte, CGFM, CPA, CFE, Auditor General, State
of Rhode Island; Chairman, American Institute of Certified Public Accountants
Almonte offered his suggestions for leadership in the
accounting profession to attendees. “I believe in a system of core values that
serve as a contract between me and you,” he stated. His values: integrity, reliability,
independence and accountability, are written on the back of his business cards
as a reminder of what he is about. He believes that financial managers have an
important responsibility to help people understand the current fiscal problem
and to help find a solution.
“Our job is to educate, communicate and to help leverage
a solution,” he stated. We are all in a life-long learning process and as a
result each individual needs to find their voice and get their message across.
As the new chairman of the AICPA, Almonte wants to focus
on building leaders in the organization. As a result, he will convene a new
leadership academy. His team will select 25 certified public accountants within
the first three to eight years of working to be matched with a current or
former AICPA board member or chair. This group will attend a summit to learn to
‘think differently as leaders’.
More to come from the second day of AGA's NLC. Check back later.
