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Denham Holds Hearing Targeting Wasteful $500 Million SEC Lease

June 16, 2011

Washington, DC – U.S. Rep. Jeff Denham (R-CA) says wasteful Securities and Exchange Commission (SEC) office lease goes far beyond mismanagement, fleecing taxpayers for half-a-billion dollars.

Denham, who chairs the Economic Development, Public Buildings and Emergency Management Subcommittee, led a hearing today to examine the SEC’s mismanagement of its independent leasing authority, and a May 16, 2011 SEC Inspector General (IG) report on the agency’s recent lease procurement of 900,000 square feet of space.

The SEC signed a lease in only a few days for space it did not need, and the amount of space it leased turned out to be hundreds of thousands of square feet more than was necessary. After receiving very few answers, Rep. Denham stated he will hold another hearing to determine how SEC will be held accountable for this type of cavalier spending of taxpayer dollars.

The IG Report found that the SEC vastly overestimated the amount of space needed under this lease, committing the taxpayer to more than $500 million based on “groundless” and “unsupportable” figures. In fact, in the course of the IG’s investigation, one SEC Realty Specialist described the standard used to develop the needed space figures “as a ‘WAG’ (wild-ass guess) and a ‘back of the envelope’ calculation.”

“After reading the Inspector General’s report, it is hard to comprehend how easily the SEC can just commit to spending $500 million of the American people’s money in just a few days,” Denham said. “It is as though the SEC did not get the memo that Congress and this administration have both been talking about cutting the waste in our federal buildings.

“Our Subcommittee has been working to cut waste in federal buildings,” Denham continued. “Billions of taxpayer dollars are wasted in underused property, the overbuilding of federal facilities and in our overreliance on costly leases to meet long-term space needs.

“Unfortunately, examples of waste abound in our management of federal real property, but the SEC’s massive half-a-billion-dollar lease for space it did not need goes far beyond mismanagement. The SEC has a history of bad leasing decisions that cost the taxpayer millions. There must be accountability and consequences for this type of cavalier spending of taxpayer money,” Denham concluded.

Because of prior abuses of independent and unchecked leasing authority, legislation introduced in the House by Chairman Denham in May – the Civilian Property Realignment Act (H.R. 1734) – eliminates the SEC’s authority to continue making mistakes like this in the future.

For more information from today’s hearing, including witness testimony, click here.

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