Watchdog finds flaws in U.S. consumer agency's building facelift

WASHINGTON, July 2 Wed Jul 2, 2014 2:30pm EDT

WASHINGTON, July 2 (Reuters) - The U.S. consumer protection regulator's multi-million dollar facelift to its rented Washington headquarters lacks proper documentation, a government watchdog said, igniting renewed criticism by Republicans who want the agency overhauled.

The Consumer Financial Protection Bureau has also failed to follow its own guidelines and analyze other options, the Federal Reserve's inspector general said in a report released publicly on Wednesday.

"As of June 23, 2014, the CFPB was unable to locate any documentation of the decision to fully renovate the building," Fed Inspector General Mark Bialek wrote in the June 30 report, which was conducted at the request of Republican lawmakers.

The CFPB is trying to locate the documents, he said, but so far it appears that "a sound business case is not available to support the funding of the renovation."

The bureau leases an office building at 1700 G Street NW in Washington that is owned by the Office of the Comptroller of the Currency and is close to the White House.

Bialek said the renovation costs are still estimated at $145 million. But the CFPB is leasing temporary space off-site, which could bump up costs to $215.8 million.

CFPB spokeswoman Jen Howard defended the project, saying the building is a "government asset that is past its prime" and that the bureau has been "open and transparent" about the cost estimates.

The decision to renovate was made in 2011, when the CFPB was still part of the U.S. Treasury and not independent, so alternatives were not considered, she added.

A spokeswoman for the General Services Administration, which is managing the CFPB project, said the costs are in line with those of "similar projects of this size and scope" that the GSA has completed in recent years. She added that the building has not undergone significant upgrades since 1976.

North Carolina Republican Patrick McHenry, who chairs the U.S. House of Representatives Financial Services panel that requested the report, said the findings are "deeply troubling and lead to even more questions about the unaccountable design of the CFPB."

The CFPB, headed by Richard Cordray, was created by the 2010 Dodd-Frank Wall Street reform law to protect consumers from predatory lending in products such as student loans and credit cards.

Republicans have fought unsuccessfully to convert the CFPB from an agency with a single director into a five-member bipartisan panel. They also want control over its budget, which is not appropriated by Congress.

Other financial regulators have also been criticized in recent years over office space costs.

In March, the Fed watchdog found that the Fed's renovation of its Martin building had missed opportunities to improve record-keeping, cost estimates and cost management, and lacked proper documentation.

In June, the watchdog at the Commodity Futures Trading Commission accused the regulator of wasting millions on leasing vacant office space. And in 2011, the SEC was criticized over numerous errors it made in securing a lease for additional 900,000 square feet of office space.

(Reporting by Sarah N. Lynch; Editing by Richard Chang)

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