18 The Solari Report / 2018 Annual Wrap Up / Part Two One of my greatest frustrations when leading the FHA was in trying to get reliable data regarding our mortgage insurance programs—particularly breakdowns contiguous to local communities and political jurisdictions. I would consistently find communities where government policies were not coordinated by place—even though the opportunities to do so and to save money were compelling. Accurate data by county or by Congressional district were essentially impossible to get, and more than a few private contractors and accounting firms would turn apoplectic if you tried to get such data. I discovered that “place-based financial data” were the federal government equivalent to ciga- rettes in a prison. How anyone was supposed to responsibly operate a mortgage insurance portfolio of hundreds of billions of credit risk without reliable property, mortgage, or local economy data was beyond me. Perhaps that was why my position had been held by eight people in the prior eight years. By the time they realized what they needed to do their job, they were gone. After taking administrative and internal steps to move the FHA Funds and operations to a sound financial footing, I and my team drafted a reform proposal and persuaded the HUD Secretary and the Office of Management and Budget (OMB) to support a Chief Financial Officer for the agency, a Comptroller for FHA mortgage insurance operations, audited financial statements, and reporting of credit and liability programs on an accrual basis. This included proposals that appropriations would be required to originate mortgage insurance and other credit expected to generate losses—the equivalent of a loan loss reserve. During this time, I received advice and support from the General Accounting Office (now the Government Accountability Office), including the Comptroller General Chuck Bowsher. Chuck was well respected in Congress and within the Administration. He was instrumental in Congress’s passage of the Single Audit Act of 1984, requiring annual audits for state and local governments. My coordination with OMB, on the other hand, involved working with William Diefenderfer, who I described in my arti- cle, “William M. Diefenderfer: The financial hit man of student loans” (https://home. solari.com/william-m-diefenderfer-the-financial-hit-man-of-student-loans/). As I explained in that article, having Diefenderfer later serve on my company’s Board of Directors “was one of the worst personnel decisions I have ever made.” My reforms for the mortgage insurance operations were adopted through the HUD Reform Act of 1989. OMB and Congress then introduced them government-wide with the Chief Financial Officers (CFO) Act of 1990 and the Federal Credit Reform Act of 1990. The CFO Act was signed into law on November 15, 1990. The CFO Act required annual, au- dited financial statements for the United States Government and its federal reporting entities. In order to apply the statutes of the CFO Act, Brady as Secretary of the Treasury, Dick Darman as head of OMB, and Chuck as the GAO Comptroller General established the Federal Accounting Standards Advisory Board (FASAB) to develop the “applicable accounting principles” for the newly required financial statements. No one could have guessed at the time of its creation that the FASAB would be used three decades later to destroy federal financial reporting and Constitutional government through an obscure accounting policy called FASAB Statement 56. Throughout the process of implementing these reforms, my relationship with Secretary Kemp de- teriorated steadily. Kemp was challenged by the operational complexity of HUD and the desire to say he was running HUD according to the law, on the one hand, while, on the other hand, man- “Congratulations, son. Here’s your graduation present... have a nice future.”