On any other day, it would be a headline, but tonight, as the country gets ready for two days of unease, today's quite dramatic and high-powered Senate hearings into Social Security abuse of funds is, regrettably, a virtual footnote. Testimony today came from past and present board members with senior rank, including former financial secretary Joe Waight, former investment committee and board member Martha Williams, former deputy chairman and current chair Yasin Shoman, and past and current GM, CEO, board member and investment committee member Narda Garcia.
It is a long and quite spectacular list and the session went form 10:00 this morning to after 6:00 pm this evening. We can't possibly hope to bring you all the highlights. But we begin with the startling revelation made by chairman Yasin Shoman, that after the $6 million default in August which blew the scandal open, Social Security has again paid a Glen Godfrey company default, thus again using public funds to cover a private debt.
Yasin Shoman, SSB Chairman
"I believe there has been one, and I think it may have been for $800,000, but I can't swear to that."
Senator Godwin Hulse,
"And under what authority are those payments being made, by whose authority? The point I am getting at is that if you have these guarantees, is not the board bound, notwithstanding that we will say it's the same government and DFC is broke and all the rest of things and it's a good thing, to say 'oh no' we have no responsibility because we have been discharged by DFC and Alliance Bank is carrying that other thing? We are out of the picture and we didn't make any money. We did a good boy's deed, we ran a dangerous risk but why are we paying anything? And why as the Chairman have you not sought to get some serious legal advice with respect to these and then we could all go home?"
Yasin Shoman,
"We have been getting legal advice. We have been working on precisely what you're saying but at the same time if the entire package goes into default it will be to the detriment of the country. It is not overnight that you could go into DFC and request a check to make up any shortfall. Its not overnight that you will go to the Alliance Bank and request payment to make up the shortfall."
Senator Godwin Hulse,
"So why would the DFC even at this late stage be picking up the responsibility? I do not understand any of them but let us just say we have a bit of conscience for the DFC. But why do we need to have for the Alliance Bank?"
Yasin Shoman,
"To my knowledge none of the loans secured by Alliance are in default."
As was pointed out later in the session Social Security is not, strictly speaking, the guarantor on the $17.5 million in Godfrey mortgages, but continues to pay, out of worker's money, apparently out of goodwill. Tomorrow we'll look at this special arrangement more closely.
