17 The Real Game of Missing Money The management of the single-family operations at FHA is traditionally run by the Deputy Assistant Secretary of Housing-Single Family (DAS-Single Family), who reports to the Assistant Secretary of Housing-Federal Housing Commissioner, who reports to the Secretary of HUD. The HUD Secretary and the Assistant Secretary of Housing-Federal Housing Commissioner are both Presidential appointees. They are nominated by the President and approved by Senate confirma- tion after an extensive FBI background check. The Deputy Assistant Secretary of Housing is traditionally recommended for appointment to the Secretary by the Assistant Secretary of Housing, reviewed and approved by the White House, and then appointed by the Secretary after a background check. When I arrived at HUD in April 1989, before I was confirmed as Assistant Secretary of Housing, one of my first jobs was to review and recommend the people for my four main deputy positions, including the DAS-Single Family. One of the resumes that our transition team forwarded to me was for Ronnie Rosenfeld, who I recommended to HUD Secretary Jack Kemp for appointment as the DAS for Single Family. Shortly thereafter, I received a call from the executive director of the National Association of Home Builders (NAHB). The message said it was urgent. Could he and the president of NAHB meet with me as soon as possible? Soon enough, I found myself in my small temporary office (I had not yet been sworn in) with the executive director and the president of NAHB. The NAHB president was quite upset. It seemed, she said, that I had made a terrible error. I had recommended Ronnie Rosenfeld for nomination as DAS for Single Family when in fact that ap- pointment, she said, was hers to make. The DAS for Single Family essentially reported to her. She did not seem to be aware that the growing HUD scandals that were part of the S&L crisis and Iran-Contra signaled a new day. In the meantime, I was beginning to understand why we were not in compliance with our existing financial management laws. I explained that the new Administration was planning on running things by the book and that the DAS for Single Family was going to be appointed by the Secretary with approval of the White House. I was only going to recommend to the Secretary candidates qualified to do an excellent job based on merit. She needed to understand that the line management of a $320 billion-plus govern- ment insurance program would report to government officials—not to the president of the NAHB. The president stood up, pointed her highly lacquered finger in my face and, using the F-word liberally, explained, “I will have you fired.” I looked her in the eye and said, “You know you probably can, but it will take you a while. In the meantime, I am going to get this operation on a sound financial footing.” I then picked up the phone, called security, and requested that a securi- ty guard physically evict her from the building. Inspired by my call, the executive director quickly hustled the spitting and yelling president out of my office and down the hall to the elevators. Before Ronnie arrived on the job, I moved out from the Single Family office the fellow who was processing land development deals with the company said to be owned by the NAHB president and, with the assistance of now Deputy Assistant Secretary of Housing Ronnie Rosenfeld, shut down the program. I was fired approximately eighteen months later, in part for my refusal to implement illegal orders, but by that time I had the FHA on a sound financial footing. However, that solid financial footing was not to last. If anything, it turned out that I righted the ship so that a new and larger round of stealing with the 1990s housing bubble could begin.