The following appears in the August 26-September 1, 2011 issue of the Long Island Business News:

In the dog days of August, bureaucrats at the Port Authority of New York and New Jersey released an edict decreeing tolls on the six Hudson River crossings must be increased for the third time in 10 years, in this case by a whopping 50 percent. If they were to get their way, to drive over the George Washington Bridge or to pass through the Lincoln Tunnel would cost $12. Fortunately, the governors of New York and New Jersey, who have veto power over agency actions, said, “No way,” and imposed a more modest increase to fund what they called “the agency’s fiscal mismanagement.”

After becoming executive director of the Port Authority in 1995, I quickly learned agency careerists believed the region’s commuters should consider it an honor to pay increased tolls to fund the authority’s fiscal and construction follies that have included the JFK “Tunnel to Nowhere,” the failed fish port, failed industrial parks and a language school. I also learned resources had been squandered to support an overpaid, bloated bureaucracy whose main concern was preserving their power, perks and pensions. During my tenure, I proved bureaucrats were not indispensible by improving services after eliminating 15 percent of Port Authority jobs and seven of the 14 layers of management between the executive director and toll collectors.

Today, P.A. elites are at it again. They claim that even though they have a zero-growth operating budget, have kept the headcount flat and total authorized positions are the lowest since the 1995 downsizing, they still need a toll increase. Their reason: an unjustifiable projected increase of 5 million autos and trucks utilizing the crossings did not materialize.

This excuse is a classic red herring that draws attention from the real issue. To expect toll collections to grow at all, particularly during a recession, is absurd. The P.A. bridges and tunnels, which have been operating for over half a century, are considered “mature businesses” that have reached maximum traffic flows. Hence vehicle usage has been relatively flat for over a decade. The real reason for the toll increase is ever-increasing cost overruns in the redevelopment of the World Trade Center facilities.

The most outrageous cost-overrun boondoggle is the lower Manhattan PATH subway terminal known as the “Transportation Hub.” The original $1 billion cost of this work of art masquerading as a subway station that caters to a few New Jersey suburban commuters during rush hours (50,000 passengers per weekday versus midtown Penn Station’s 500,000), has jumped to $3.4 billion. It will wind up costing $200 million more than the new One World Trade Center. How ridiculous is that!

Bureaucrats responsible for this mess should be fired and P.A. board members, who obviously failed in their oversight duties, should do the honorable thing and resign.

Another reason why the authority needs more money: their flagrant misuse of call-in agreements to cover temporary staffing services and professional, technical and advisory services, a.k.a. consultants. To maintain the public façade that the agency’s employee headcount is down, the P.A. has had 1,858 service contracts and call-in agreements valued at $4.38 billion in effect during the period April 1, 2006 through July 30, 2009. A scathing report released in July by state Comptroller Tom DiNapoli, reveals that the P.A. did not have documentation to justify the need for new or renewed contracts to the tune of $1.18 billion. This is an unacceptable misuse of toll payers’ hard-earned money.

The Port Authority is dominated by an arrogant political bureaucracy that believes it is not accountable to the people or their elected officials. To tame the authority, Govs. Andrew Cuomo and Chris Christie should order their board members to clean house and hire management committed to applying the same fiscal cost-cutting methods the governors applied to their respective state budgets.

Check out George Marlin’s new book Narcissist Nation:  Reflections of a Blue-State Conservative.

 The following appears in the August 12-18, 2011 issue of the Long Island Business News:

People interested in a good summer nonfiction read should pick up a copy of the bestseller, “Reckless Endangerment: How Outsized Ambition, Greed, and Corruption Led to Economic Armageddon,” by Gretchen Morgenson and Joshua Rosner.

Morgenson, a Pulitzer Prize-winning New York Times business news reporter, and Rosner, an expert housing and mortgage research analyst, have penned a fascinating no-holds-barred story about those responsible for the mortgage meltdown that caused the greatest economic downturn in America since the Great Depression.

The seeds of destruction were planted by Bill Clinton in 1994, when he announced that the U.S. government was determined to “expand the American Dream” by increasing the number of homeowners across America.

To implement his policy, Clinton turned to Fannie Mae, a New Deal creation that has supported the housing market by purchasing mortgages.

Fannie Mae, which was privatized in the 1960s and since 1981 has issued and guaranteed mortgage-backed securities, maintained the false image that it was still a government-backed organization because it was exempt from disclosing financial data and executive salaries, from paying taxes in the District of Columbia and some board members were appointed by the president.

Fannie Mae, “Reckless Endangerment” documents, “led the way in relaxing loan underwriting standards.” Down payments of 20 percent and income verification were eliminated. Lending institutions were told to approve mortgages in a more “democratic” fashion and to expand creative financing and to simplify the home-buying process.

The authors persuasively argue that James A. Johnson, CEO of Fannie Mae (1991-1998), “not only opened the door to the mortgage meltdown [but] virtually guaranteed it.” A master at public relations, political lobbying and fundraising, he manipulated Congress to eliminate government oversight of Fannie Mae even though it accepted government subsidies.

The Federal Safety and Soundness Act of 1992, which had Johnson’s fingerprints all over it, actually encouraged unsafe and unsound Fannie Mae activities, permitted it to design its own regulations, eliminated oversight and accountability and required it to meet the needs of “low income and underserved families.” The 1992 act set the stage for Fannie Mae to buy from lending institutions around the nation risky loans that were likely to default.

Rep. Barney Frank of Massachusetts, a prime enabler of the legislation, when asked if he was concerned that many people who received subprime loans would face financial ruin, smugly replied, “We’ll deal with that problem if it happens.”

Well, it did happen and in a nutshell here’s how: After buying tens of billions of subprime mortgages from banks and mortgage lending institutions, Fannie Mae bundled them and sold them to investment banking firms (e.g., Goldman Sachs) who procured insurance guarantees and AAA ratings from Moody’s and Standard & Poor’s. The investment bankers then sold these toxic securities to unsuspecting individuals, mutual funds and bank investment portfolios. Unloading these subprime mortgages to various investors was merely a reshuffling of the chairs on the deck of the Titanic.

When the real estate bubble burst and the housing market collapsed many financial institutions – like Long Island’s now defunct American Home Mortgage Investment Corp. – and insurance companies on the hook, bellied up and threatened to take down the entire financial system.

Millions of ordinary people could only stand by helplessly as the equity in their homes and the assets in their 401(k) retirement plans were wiped out. And to add insult to injury, these same taxpayers were stuck with footing the bill to bail out institutions “too big to fail.”

In a riveting narrative, Morgenson and Rosner expose the guilty culprits in both the private and public sector. To learn why “power corrupts and absolute power corrupts absolutely,” spend a few hours on the beach reading “Reckless Endangerment.”