Billions in federal spending, largely a result of two foreign wars, were pouring into the local economy by the early 2000s. Then came the housing bubble. But after it burst, a remarkable inversion occurred: as the country withered, Washington bloomed. Since 2007, the regional economy has expanded about three times as much as the overall country’s. By some measures, the Washington area has become the richest region in the country. It is now home to the three highest-income counties in the United States, and seven out of the Top 10. ...NYT
The New York Times' Annie Lowrey has an long, depressing report published today online for the Sunday NYT Magazine, about how Washington got very, very rich and much, much whiter. This is now a town where inequality is a showcase, where the divide betweenthe struggling working and middle class and high salaried and entrepreneurial mega-millions and -billions are spent on Teslas, outrageous rents and opulent new homes -- and new members of Congress discover the wonderland that began in the Reagan era.
It's about federal contractors, first "discovered" during the Reagans' time in the White House. It became, as the New York Times puts it, "Washington's economic boom, financed by you," and it has continued into the past six years when you and I (and federal employees) aren't anywhere near booming economically.
In a study released in 2011, the Project on Government Oversight found that using contractors can cost the federal government about twice as much as federal employees for comparable work. According to the study, the salary for a federally employed computer engineer would be about $135,000; a contractor might bill the government around $270,000 for similar work.
It was not until the Bush years, though, that this increasingly wealthy not-federal-but-still-government work force truly metastasized. The amorphous war on terror and the creation of the Department of Homeland Security — plus the wars in Afghanistan and Iraq — bloated the country’s spending by about $1 trillion. The contracting dollars that were pumped into the local economy, Fuller says, more than doubled between 2000 and 2010, when it reached $80 billion a year. This, in turn, created hundreds of thousand of desk jobs and fostered a sprawl of nameless, faceless office parks lining the roads out to Dulles Airport. ...NYT
While consultants and contractors and their kin are making out like bandits, people around the nation have been experiencing the damaging effects of those contractors' well-paid efforts to fix the damage banks did with their mortgages during the same period.
Federal banking regulators are trumpeting an $8.5 billion settlement this week with 10 banks as quick justice for aggrieved homeowners, but the deal is actually a way to quietly paper over a deeply flawed review of foreclosed loans across America, according to current and former regulators and consultants.
To avoid criticism as the review stalled and consultants collected more than $1 billion in fees, the regulators, led by the Office of the Comptroller of the Currency, abandoned the effort after examining a sliver of nearly four million loans in foreclosure, the regulators and consultants said.
Because they have no idea how many borrowers were harmed, the regulators are spreading the cash payments over all 3.8 million borrowers — whether there was evidence of harm or not. As a result, many victims of foreclosure abuses like bungled loan modifications, deficient paperwork, excessive fees and wrongful evictions will most likely get less money.
“It’s absurd that this money will be distributed with such little regard to who was actually harmed,” said Bruce Marks, the chief executive of the nonprofit Neighborhood Assistance Corporation of America. ...
... A critical flaw from the start was that the federal government farmed out the work of scouring the millions of foreclosures to several consulting firms that charged as much as $250 an hour and outsourced work to contract employees, many of whom had no experience reviewing mortgages, according to the reviewers, regulators and bankers. ...NYT