Hale linked to HUD scandals of mid '80s

Newly-named Executive Vice President Janet Hale was close to a series of scandals that shook the U.S. Department of Housing and Urban Development during the late 1980s, according to newspaper accounts and congressional records. Hale served as the Deputy Assistant Secretary of Housing at HUD from 1985 to 1986 and as an associate director of the White House Office of Management and Budget from 1989 to 1992. She also served three years in the Department of Transportation. Hale testified before Congress during the summer of 1989 about her role in two HUD controversies -- the funding of a Durham, N.C., housing project and the management of a housing-loan insurance program, according to transcripts of her testimony. President Sheldon Hackney said yesterday that he continues to be confident in Hale's abilities. "She's really quite an able individual and I trust fully in her judgement and abilities," Hackney said. He said that while he was interviewing Hale he knew she had worked for HUD, but was unaware of her role in the investigations of the HUD scandals. "It occurred to me that she was at HUD when some inconsistencies happened there," he said. "But it was my understanding she came forward and that she has performed in such an exemplary manner since then. All my worries were assuaged." Hackney said that "in hindsight it might have been better if some of these things had come to light earlier." According to news accounts, Hale approved a key rent-ceiling waiver for an $11 million HUD project in Durham, despite objections from HUD staffers who said that there was environmental waste buried near the site and that the city's mayor was a friend of then-HUD Secretary Samuel Pierce. Hale told Congress that she signed off on the project -- despite her own objections -- after a HUD official told her the waste was cleaned up and Pierce ordered her to sign the document, according to transcripts of Hale's congressional testimony. Hale said yesterday that she was in "a very tough situation" at the time. "I thought about leaving [HUD]," Hale said. "But I looked at the range of activities I was involved in and decided I could do a better job by staying." Hale's predecessor at HUD, Shirley Wiseman, left because of the same issue. Hale also said that at the time she was not aware of the friendship between Pierce and Markham, the Durham mayor. "This project was a cornerstone of urban revitalization for the city of Durham," she said. "All I knew was that [Markham] was an elected official. Elected officials call federal agencies all of the time." Hale added that she "made sure there was nothing illegal" before signing the waiver. The congressional subcomittee headed by Rep. Tom Lantos (D-Calif.) that investigated the HUD scandals also questioned Hale about her rejection of a 1985 report by HUD Inspector General Paul Adams. The report recommended suspension of a HUD-backed co-insurance program run through the DRG Funding Corporation, according to a story which appeared in The Boston Globe in 1989. Adams testified that Hale had called the report "premature, unjustified and unfair," according to transcripts of Adams' testimony. Hale said yesterday that she did not recall saying that. According to Adams' testimony, DRG's poor underwriting practices were first cited in his 1985 report and later contributed to a 29-percent default rate for co-insured loans. This cost the government over $500 million, according to news reports. DRG was still operating when Hale left HUD, but went out of business shortly after her departure, Hale said yesterday. "I thought the DRG issues were very important," Hale said. "When we set up the co-insurance program I said that it had to be managed and had to be supervised properly. I thought there had to be competent and qualified staff overseeing it." But Hale said that some of the problems resulted because HUD was having "a hard time staffing the office." She also said that while she knew there was an inspector general's report, she did not sign the document. "I didn't sign that report," Hale said. "The housing staff [of HUD] that reviewed the report found problems with it and if I had read and signed that report, I would have changed the tone of it. But I did not [sign it]. One of my assistants signed that report on my behalf." She also said she had never been under congressional investigation and that Congress made no allegations against her. But congressional officials claimed that Pierce allowed DRG to escape normal regulation without clearance from HUD. "This was done right before I became Acting Deputy Assistant Secretary," Hale added. "DRG was using very lax underwriting standards and taking risks we didn't agree with." Prior to testifying before Congress, Hale -- who was then in charge of a part of OMB that oversees HUD funding -- said she told then-Budget Director Richard Darman that she would resign rather than risk accusations of conflict of interest that might embarrass the President or the OMB. Hale said she and Darman eventually agreed that she should remove herself from any OMB business relating to the HUD scandal. But according to news reports in both The Philadelphia Inquirer and The Boston Globe, Darman ordered Hale to remove herself from issues pertaining to the HUD scandal. The papers also stated that Hale continued to work on HUD matters not directly connected with the developing scandal. Lantos aide Stuart Weisberg said yesterday that all reports of the congressional investigation of HUD have been turned over to independent counsel Arlin Adams. A legal aide to Adams -- who is a University Trustee Emeritus -- said she could not comment on any ongoing grand jury investigations pertaining to the HUD scandal. Hale said she is "cooperating fully" with Adams and that to her knowlege she is not under investigation by his office. Several federal cases are still pending against Hale's former superiors at HUD. Hale said she is pleased that Congress has passed legislation reforming HUD practices in recent years. "I think [HUD] is changing, and I think it needs to change," Hale said. "A lot of reforms are making a difference." Other University officials said they had no knowledge of any questionable actions in Hale's past or were only "vaguely aware" of any issues related to the HUD scandals. And many said they are very excited about Hale and her appointment. One said he liked her "impeccable credentials and demeanor." Hale said she is looking forward to getting to work behind her Franklin Building desk in March. "I am very excited about coming to the University," Hale said. "It's a great institution with wonderful faculty and students."

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