16 The Solari Report / 2018 Annual Wrap Up / Part Two joined from DOJ, that we did not have to honor our contracts. Rather we could abrogate contracts and ignore the law. If those who had been harmed sued us, Frank said, by the time they won “we will be gone.” Frank was to help write and pass new laws and administrative policies to use HUD as a player in War on Drugs activities to generate enforcement revenues. After many dirty tricks and much ranting and raving, HUD was to turn the defaulted coinsurance portfolio over to a private contractor named Ervin & Associates, a newly created company founded by John Ervin, a former employee of Harvard’s HUD property manage- ment company, NHP, Inc. (formerly National Housing Partnerships.) The coinsurance program was so corrupt that even the Mortgage Bankers Association lobbied HUD to clean it up. After issuing $9 billion of federal insured multifamily mortgages in five years before I shut it down, the coinsurance was ultimately to have a default rate of 50% despite a rich provision of capitalized interest. I describe what happened in more detail in the “Kemp Tapes.” My concern for money disappearing illegally from the federal government began when I first ar- rived at FHA. One way to summarize my professional life since the day of my arrival in Washing- ton in 1989 is that I have watched, documented, and tried to stop money disappearing from the federal government ever since. There are as many ways to steal money from HUD and the federal government as there are rec- ipes in the Joy of Cooking cookbook. As long as the federal government can collect taxes and sell Treasury securities and the Federal Reserve banks operate a fiat currency system supported by a global military, both without real audits or lawful disclosure by agency and Congressional district, there are always more assets and money that can go missing. The existing federal credit mecha- nism is a harvesting system—it comes with a license to steal. That is why elections are hotly con- tested—not because the executive branch controls and governs the U.S. government. Rather, it is because the political officials who control the executive branch control a portion of the private patronage that comes with being the operator of a financially secret operation managing trillions in credit, assets, spending, and related data and regulations. The FHA mortgage insurance operations are generally divided between two funds. The coin- surance program described above was run from the FHA General Fund, which included the multifamily, hospital, and other high-risk insurance programs. The larger fund was the Mutual Mortgage Insurance (MMI) Fund, which funds the single-family residential mortgage insurance originated by FHA. The official amount of outstanding mortgage insurance in force in the MMI Fund as of fiscal 2018 was approximately $1.1 trillion, with the fiscal 2018 budget requesting authority to issue $400 billion in new mortgage insurance. The MMI Fund is required by law to be financially self-sustaining; that is, mortgage premiums have to cover losses on defaults and the cost of operations. One of my immediate challenges in 1989 was to determine what our finances actually were. The accountants for the FHA reported to a different Assistant Secretary, and I was not allowed to speak with them. After several months of politicking, I was able to get them moved over to my operation, only to discover that the MMI Fund was losing $11 million a day. It took several more months to determine where the losses were occurring. We were generating a profit in eight of ten federal regions and losing the profits (and more) in the two regions—Regions VI and VIII—defined by S&L and Iran-Contra fraud. Region VI included both Texas and Arkansas.