Rep. Ann Wagner, R-Mo., said after a hearing that she wonders why the Treasury agency exists. Andrew Harnik/AP file photo
Watchdog's Criticisms Add to Woes of Agency Already at Risk of Elimination
GAO says it's had a hard time gaining access to people and documents at Treasury's Office of Financial Research.
The Treasury Department’s Office of Financial Research, established in response to the 2008 financial crisis, has been in the crosshairs of Republican budget cutters while its staff suffers from low morale. Last week, the Government Accountability Office added to its woes.
The watchdog weighed in with written testimony to a House Financial Services subcommittee complaining auditors had “experienced repeated problems with gaining access to both people and documents” from the office.
“Many meetings took months to schedule, some were canceled with short notice, and responses to requests for documentation and other information were delayed,” said a “statement for the record” prepared by Lawrance Evans Jr., GAO’s managing director for financial markets and community investment. “Whistleblower allegations raised additional concerns about the quality of information that OFR provided GAO,” he added, citing allegations that some data was “manipulated.”
The hearing called by Oversight and Investigations chairwoman Rep. Ann Wagner, R-Mo., came as Republicans are planning cuts to the budget and staff of an agency some see as redundant. “From studies that impugn the workplace culture, to low morale, multiple ongoing investigations, and today’s harsh criticism of OFR by the Government Accountability Office, it appears to both outsiders and insiders that this organization is completely dysfunctional,” Wagner said after the Dec. 7 hearing. “Following these reports of mismanagement, questionable analysis, bureaucratic redundancy, and the inability to fulfill its statutory mandate, one question comes to mind: Why does the OFR exist?”
She argued that eliminating the OFR “would improve risk management by encouraging diverse perceptions of risk and more robust risk management strategies.”
Rebutting her argument was ranking member Rep. Al Green, D-Texas, who said the research office that surveys markets looking for instability was a “necessary part of the Dodd-Frank defense against systemic failure,” referring to the 2010 financial reform law. “Just because it has some problems doesn’t merit elimination,” he said, objecting to proposed cuts of 25 percent in the budget and 45 percent of the staff of 207.
Defending the agency was a sole witness, Director Richard Berner. He outlined steps the research office has taken to improve communications, including a strategic plan. “Our workforce has great expertise and experience in fields central to our mission and related support functions,” he said, agreeing with the Democrat’s prompts that his office is “essential and critical. “
“I am proud of the accomplishments that the dedicated OFR workforce has made possible,” Berner added. “However, morale among OFR employees is low. Federal Employee Viewpoint Survey results for the OFR began to decline in 2014. In response, we took steps that included launching an employee engagement project that produced recommendations resulting in changes, such as an employee suggestion box, an employee Lunch and Learn program, a newsletter and electronic message boards to keep employees informed, a redesigned and upgraded employee intranet site, an online employee directory and an employee recognition program.”
Berner’s testimony also said morale had been affected as “employee stress rose as proposals repeatedly surfaced in Congress to eliminate the office.” He presented findings from an outside consultant that, while critical of the agency’s management, did not bear out charges of discrimination against minorities.
As for GAO’s charges, Berner said he has asked his team to always respond to inquiries from that watchdog and the inspector general. “During a GAO audit that began in February 2015, eight OFR senior managers and several other OFR employees were interviewed and the office provided more than 700 pages of requested documentation,” he said. “The OFR complied fully with all GAO requests related to the audit. The GAO reportedly terminated the audit in 2016 but never informed the OFR.”
Berner acknowledged some delays in responding to GAO due to staff turnover.
GAO provided details on the roadblocks its auditors ran into when seeking documents or scheduling meetings, adding that “officials we met with were frequently unable to answer our questions. In some cases, OFR officials in the best position to answer our questions were unable to provide answers or would direct us to ask others in the agency, who also told us they were not able to answer.”