Infographic on DOD Sequestration

Infographic_IconOn March 1st, 2013, the president ordered across-the-board spending reductions for all federal agencies and departments, known as sequestration.

As a result, the Department of Defense (DOD) needed to reduce certain spending by about $37.2 billion over the remainder of FY 2013. To absorb these cuts, the Department reduced spending across its discretionary accounts subject to sequestration, with its largest account, operation and maintenance, absorbing the largest reductions.

We recently reviewed DOD’s implementation of sequestration and its effects, including how much flexibility DOD had to absorb spending cuts, and the results of those reductions. Our infographic below highlights some of our findings, and how they could inform future planning:


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Housing Finance Weaknesses

housing thumbnailDid you buy a house before 2007 and, over the next few years, watch its value fall to less than what you owed on your mortgage? Did you lose a house to foreclosure? Weaknesses in the U.S. housing finance system played a major role in the most severe economic downturn since the Great Depression. Today, we describe some of the weaknesses that led to—or were revealed by—the 2007-2009 financial crisis, and their effects on today’s housing finance system.

Falling Home Prices

The financial crisis revealed many problems related to mortgage originations. Leading up to the financial crisis, some lenders created complex mortgage products and loosened the standards used to evaluate a potential borrower’s ability to repay a loan. As a result, some borrowers took out loans with terms they did not fully understand or could not afford.

At the same time, there was an expectation that house prices would continue to rise, and many homeowners borrowed against the equity in their homes. Instead, house sales and prices began falling dramatically in 2006, as shown below, and sales at the end of 2014 were still below prior levels. As a result, many borrowers found themselves “underwater”—owing more than their houses were worth.

fig. 6(Excerpted from GAO-15-131)

Once the crisis began, many lenders increased qualification requirements for borrowers, making it more difficult to get private mortgages. Federal programs that guarantee loans, such as those through the Federal Housing Administration, grew considerably.

Foreclosures initially skyrocketed during the financial crisis, and although they have declined, foreclosures remain high relative to historic norms, as shown below.

fig. 10(Excerpted from GAO-15-131)

Ongoing Challenges for Borrowers to Finance Homeownership

Potential borrowers continue to have limited access to mortgages, and current homeownership rates are lower than they were in 2000. This may be due to

  • the rise in foreclosures,
  • tightened lending standards,
  • increases in student loan debt,
  • high unemployment rates, and
  • stagnant wages.

Government Efforts

The federal government has attempted to address many of the weaknesses exposed by the housing crisis. Efforts have included

  • changing qualifications for government programs that insure and guarantee mortgages;
  • encouraging lenders to modify or refinance existing mortgages, through programs such as the Home Affordable Modification Program, so that borrowers will be more able to afford their loans;
  • imposing new requirements on banks that service mortgages;
  • increasing requirements for disclosing mortgage risks to potential borrowers; and
  • creating the Consumer Financial Protection Bureau to protect borrowers during the housing finance process.

It is still too early to tell what the impact of some of these federal efforts will be. More broadly, the appropriate level of federal support for housing finance is still in question. Check out our full report on weaknesses in the housing finance system for a framework to assess the impact of potential changes.

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Podcast on DOD Weapons Programs

Each year, we review the Department of Defense’s (DOD)thumbnail_defense portfolio of major weapons system acquisitions. Our 2015 review was published on March 12th, and this week, we released our podcast on this work. Continue reading

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A Closer Look at Privacy as a High Risk Area – When Advancing Technology Meets Increasing Concerns

From online health care exchanges to mobile devicethumbnail_information_security location data, the privacy of personally identifiable information (PII) is a major concern when it comes to information technology. Today, we take a closer look at the privacy of PII, and why we added it as a key component of one of our longstanding High Risk areas—federal cybersecurity. Continue reading

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Infographic on Guidance Documents from Federal Agencies

Infographic_IconFederal agencies issue many documents targeted to the general public. These guidance documents help explain things like how employers can comply with workplace safety laws or how Head Start grantees can meet requirements.

Continue reading

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Podcast on North Korea Sanctions

North Korean tests of nuclear weapons and ballisticGAO Podcast Icon missiles threaten the United States and other United Nations member states. These types of actions have prompted the U.S. and the U.N. to impose sanctions on North Korea.

Hear our podcast with Tom Melito, a director in GAO’s International Affairs and Trade team, who led a recent review of U.S. and U.N. sanctions on North Korea.

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Shortages of Drugs Containing Controlled Substances

As we have previously discussed, in the last decade, Thumbnail Health Careshortages of prescription drugs have increased nationwide. In recent years, the number of new shortages reported has declined, but the number of active shortages of drugs containing controlled substances—a subset of prescription drugs such as narcotics, stimulants, and sedatives—remains high. Today’s WatchBlog explores what’s behind the shortages of prescription drugs containing controlled substances. Continue reading

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Our Quick Look at Homeland Security Acquisition Programs

We recently released our “quick lookthumbnail_homeland_securityat Department of Homeland Security (DHS) Acquisitions, assessing 22 major programs created to help secure the border, enhance cyber security, improve disaster response, and execute a wide variety of other operations.

The good news? Two of the programs are on track to meet key cost and schedule goals. But where does that leave the other 20? Today’s WatchBlog explores. Continue reading

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Podcast on Medicaid Payments to Health Care Providers

GAO Podcast IconUnder Medicaid, states pay health care providers and receive federal matching funds for their payments. We have previously found that some states’ excessive Medicaid payments to certain provider institutions shifted costs inappropriately from states to the federal government.

Hear our podcast with Katherine Iritani, a director in GAO’s Health Care team, who led a recent review of state Medicaid payments to government and private health care provider institutions in selected states.

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Traveling Quickly but Safely This Summer

thumbnail_homeland_securityCurious how to pack for your next trip, or how to get into one of those TSA Pre ✔TM lines at the airport? For National Travel and Tourism Week, today’s WatchBlog highlights our recent reports on Transportation Security Administration (TSA) security efforts that could affect your airport experience. Continue reading

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