PIERCE, SAMUEL RILEY, JR. 1922-

SECRETARY OF HOUSING AND URBAN
DEVELOPMENT, 1981-1989

A Lone Black

Samuel Pierce was the only black cabinet member during the Reagan presidency, and the only one to serve the full eight years. Chosen because of his race, strong civil rights credentials, and his prior government experience. Pierce expected to improve management at the Department of Housing and Urban Development while also working to retain housing projects of vital importance to the nation's poor against Reagan's fiscal cuts. Instead, Pierce's tenure ended with his competency and integrity in question and with the department engulfed in scandal.

Background

Born on 8 September 1922 in Glen Cove, New York, Pierce was the oldest of three sons born to a groundskeeper at the upper-class Nassau Country Club on Long Island. His father used the connections he had developed to establish a valet service for the club's members and eventually earned enough to invest successfully in real estate. Prior to the New Deal the majority of black Americans were Republicans, loyal to the party of Lincoln. Their father's success in business drove home the virtues of self-reliance, ambition, and political awareness among the Pierce sons. A star athlete, Pierce won an academic scholarship to Cornell University but dropped out in 1943 to serve in the U.S. Army, where he became one of the few blacks to be trained as an officer. Leaving the military at the end of the war with the rank of first lieutenant, he finished his undergraduate degree and attended Cornell's law school. He subsequently earned an LL.M from New York University and was a Ford Foundation Fellow at Yale University Law School. After serving as Manhattan district attorney and as U.S. attorney in New York, Pierce entered the Eisenhower administration as the first black to hold the post of assistant to the undersecretary of labor. He then became an associate counsel to the House Judiciary Committee. During the 1960s Pierce became the first black partner in a major New York law firm and the first black to serve on the board of a Fortune 500 company. He joined a team of lawyers assisting Martin Luther King Jr, and later was a principal founder of the Freedom National Bank, the first black-owned bank in New York State.

Treasury Department

Though most civil rights activists were Democrats, Pierce remained loyal to the Republican Party of his upbringing, becoming a leading member of the Committee of Black Americans for Nixon-Agnew in 1968. For that he was rewarded with the post of general counsel to the Department of the Treasury, helping to draw up the Nixon administration's wage-price freeze. When Ronald Reagan was looking for a member of a minority group for secretary of the Department of Housing and Urban Development (HUD), he turned to Pierce. Knowing that Reagan had campaigned to cut social programs, he preferred to be secretary of labor or attorney general, but was persuaded by Reagan personally to take the HUD position. At his confirmation hearings he promised that those programs of most importance to the poor would not be cut, only the most egregious waste. But Pierce also echoed Reagan's "trickle-down" rhetoric when he said that "the fact is that reliance on government hasn't worked and it's time to try something new. The fact is that revitalizing the economy will help everyone…and the poor have the most to gain." Within months Pierce backed severe cuts in the Section 8 basic housing program, while also proposing to make such residents pay more of their limited income in rent. He nevertheless succeeded in blocking cuts in the Urban Development Action Programs, keeping $500 million available to stimulate private investment in downtown rehabilitation projects. Criticizing previous HUD secretaries, Pierce claimed that there was little administrative efficiency at the department and launched a massive collection program to reduce the __BODY__.8 billion in debts owed to HUD.

Silent Sam

Unlike other cabinet members, Pierce remained in the background of the Reagan administration, and was dubbed "silent Sam" for his relative invisibility. By the end of his tenure, however, this moniker had acquired new meaning when, his department engulfed in scandal, Pierce pleaded the Fifth Amendment when called before Congress to testify about corruption, influence peddling, and kickbacks that had been previously uncovered in HUD. As government lawyers sought to make sense of the widening scandal, the key question was whether Pierce was a lax administrator despite his promises to improve efficiency or at the heart of a giant conspiracy to defraud taxpayers and reward Republican Party contributors.

Stockman's Warning

The first revelations of abuse came as early as 1981 when former budget director David Stockman warned that the "hogs were really feeding" throughout the Reagan administration. By the mid 1980s HUD's own general counsel began to indicate that something was amiss, yet he was ignored. It was not until late 1987 that the press began to close in on the story, which consisted at first of fairly commonplace allegations of kickbacks in HUD, but before long an avalanche of charges came forth from every corner of the nation, indicating a clear pattern suggestive of conspiracy. By 1989 more than 630 separate criminal investigations would be opened against HUD. In an agency ostensibly founded to assist the poorest Americans, government lawyers uncovered numerous instances where tax monies benefited the wealthiest. While the Federal Housing Administration and its mortgage-guarantee agents suffered more than $90 million in defaulted loans on projects intended to house the poor, it was found to be subsidizing luxury condominiums and golf courses. All across the country, Republican insiders were provided with loans and rent subsidies for projects not needed, and when those projects failed, the American taxpayers were stuck with the default bill. HUD spent more than $3 billion to build eighty thousand houses that ultimately had to be fore-closed upon and sold by agents who were supposed to deduct their fees and submit the remainder to HUD. Most fees were shown to be hyper inflated, and in some cases agents pocketed the principal as well. One notorious agent dubbed "Robin HUD" by the press walked off with $5.5 million. With a budget of $20 billion designed to be awarded in contracts, HUD had always been open to corruption, but the scandals unearthed in the late 1980s were so extensive that the press spoke of a "feeding frenzy" on the part of connected Republicans to cash in at the trough. James Watt, the disgraced former secretary of the interior, collected $400,000 in one fee simply for picking up the telephone and making a connection for a friend. By last accounting the total damage to taxpayers was estimated at $8 billion, rivaling the losses in the savings-and-loan scandals.

Despair

All of this was laid at the feet of Samuel Pierce. Rep. Tom Lantos (D-Cal.) said that while Pierce claimed to be fighting bureaucratic inefficiency, he realized early on that this was a hopeless cause and so instead "milked" the system for himself, his cronies, and connected Republicans. Pierce retorted by claiming that he was unaware of what was happening, yet one columnist answered that the secretary would have to have been "an embalmed corpse" not to know. Some of Pierce's immediate subordinates in HUD testified that all was known at the top. Deborah Gore Dean, Pierce's administrative assistant, who was found guilty of fraud and conspiracy and sentenced to five years in prison, declared that HUD was a "system of spoils and favoritism," while Dubois Gilliam, one of HUD's highest administrators, also jailed and testifying before Congress on furlough from prison, said that orders had come down from above. In the end, investigations into possible criminal activity on the part of Pierce found that while the secretary had allowed loans to projects not meeting guidelines, approved administrative pay raises and jobs for political favorites, and allowed tax breaks for the wealthy and fat fees to influential Republicans, there was "no proof" of outright theft or intent to defraud.

Inefficiency

Despite being the only member of Reagan's cabinet to serve for two full presidential terms, Samuel Pierce left office under a cloud, his reputation in question. At the least, HUD's record during Pierce's tenure undermined the Republicans' creed and their claim to be rigorously efficient in their efforts to curb what they called the waste and profligacy of previous Democratic administrations.