CFPB can't manage its own funds
The Consumer Financial Protection Bureau (CPFB) has come under fire for a renovation project at its headquarters building that will cost almost as much as the building is worth.
The Wall Street Journal is reporting that renovations at CFPB headquarters are costing at least $145 million - up from an estimate ofr $95 million - while the building itself is worth $154 million.
The exchange between CFPB chief Richard Cordray and House Financial Services Chairman Jeb Hensarling is surreal:
House Financial Services Committee Chairman Rep. Jeb. Hensarling (R., Texas) questioned why renovating the building had soared to $145.1 million from a prior estimate of $95 million, according to a December financial report from the regulator. The regulator's employees are expected to move to temporary space while the renovation work is being completed.
Mr. Hensarling compared the agency's renovation of the late-1970s-era building, on a cost-per-square foot basis, to the Trump World Tower in New York, Bellagio Casino in Las Vegas and the Burj Khalifa in Dubai-the tallest building in the world.
"Explain to me, Mr. Director, why I should be-why I shouldn't be outraged, and why the American people shouldn't be outraged," he said.
The building is the former headquarters of the now-defunct Office of Thrift Supervision. It's owned by the Office of the Comptroller of the Currency, which merged with OTS in the wake of the financial crisis, and is leased to the CFPB for 20 years.
Mr. Cordray defended the renovation work as unfortunate but necessary. The work, being managed by the General Services Administration, includes replacing 35-year-old windows with new energy-efficient ones, upgrading air conditioning, plumbing and electrical systems, replacing elevators, as well as a new roof and reconstructed interior offices. It is now projected to cost $139 million, down from the December estimate cited in the House hearing.
"The notion that we would try to build some palace that we don't even own or control doesn't make much sense to me," Mr. Cordray said.
Mr. Hensarling later retorted: "My guess is cheaper space could've been found in Reston," a Virginia suburb. "And the American taxpayers would've appreciated it."
Rep. Patrick McHenry (R., N.C.) questioned why renovation costs approached the building's estimated value of nearly $154 million, according to a 2012 Treasury inspector general's report.
"It's a building that's a deteriorated building," Mr. Cordray said. "It's a classic white elephant...It's going to cost a fair amount of money to bring it back up to standard."
If it's a "white elephant" (a "classic white elephant" at that) why move into it in the first place? And if bringing it "back up to standard" is going to cost as much as the building is worth, what kind of "standard" are we talking about?
My guess is that the offices for top agency managers weren't grand enough, and there weren't other amenities enjoyed by federal workers.
The amount of money we're talking about is irrelevant. After all, Congress spends $145 million every time someone sneezes. Rather, it is the attitude taken by the agency that is disturbiing. There is not a second thought given to whether there might have been cheaper alternatives that would have saved the taxpayer money. This is the way of the bureaucracy and is the reason it's nearly impossible to get them to cut the budget intelligently.