Journalism in the Public Interest

Study: Foreclosure, Debt Causes More Denials of Security Clearances

More government workers and contractors are being denied security clearances or having their clearances revoked due to their financial debt, according to a study by security clearance lawyer Sheldon Cohen [PDF].

According to his report, the number of Defense Department security clearance denials and revocations “has kept pace with the number of foreclosures, defaults, and short sales in the country.” From the study:

Since the collapse of the housing market in 2008, debt resulting from job losses and home foreclosures have had a devastating effect on people holding national security clearances. That, more than any other factor today, is causing the revocation or denial of security clearances, resulting in the loss of good paying jobs, and putting skilled workers further and further behind in their effort to dig out of debt.

The government’s decisions to grant security clearances to individual contractors or government workers take into consideration the individual’s financial status—the idea being that people in tough financial positions are more likely to breach security when offered financial incentives. From the guidelines:

Failure or inability to live within one's means, satisfy debts, and meet financial obligations may indicate poor self-control, lack of judgment, or unwillingness to abide by rules and regulations, all of which can raise questions about an individual's reliability, trustworthiness and ability to protect classified information. An individual who is financially overextended is at risk of having to engage in illegal acts to generate funds. Compulsive gambling is a concern as it may lead to financial crimes including espionage. Affluence that cannot be explained by known sources of income is also a security concern. It may indicate proceeds from financially profitable criminal acts.

Given this rationale, it doesn't seem that the increase in denials or revocations of clearance are necessarily a bad thing, but it does seem that for government workers and contractors in tough financial straits, the hardship of losing a house, for instance, could be compounded by a denial or revocation of clearance—an aspect of the nation's financial crisis that we found interesting.

The new study examined security clearance cases at the Department of Defense Office of Hearings and Appeals, and found that between January 2006 and June 2010, 62 out of 71 cases hinging on an individual’s financial position were decided against the applicant at the appeals stage. Clearance denials were affirmed more often than they were reversed, and initial clearances were more often reversed than affirmed.

“The Appeal Board has not affirmed a favorable decision that was appealed by the government in almost two and a half years to the time of the writing of this article,” the report said.

The study noted that it only provides a limited view of what’s happening with security clearances. That’s because the Defense Department Office of Hearings and Appeals is one of 11 offices that rules on these security clearance cases, and according to Secrecy News, it’s one of the few that actually publishes its decisions.

An estimated 3 million government workers and 1.5 million contractors have some level of security clearance, CBS News reported. The Washington Post, in a recent investigation of the U.S. national security system, estimated that about 854,000 people hold top-secret clearance.

Understandable why heavy debt would disqualify someone for a security clearance.

Since WW2, virtually all American traitors have done it for money and most were in debt when they became “walk-ins” for the Soviets.

Jean MacDonald

Sep. 22, 2010, 5:54 p.m.

Since the whole system has become “predatory”, why blame inidividuals? How much money did the banks, credit card companies, etc. make off these people? Did anyone blame “predatory” lending companies? Why does the US Government then give bailout money to companies who filed for bankruptcy (and change their names)? Doesn’t that sound hypocritical? I could see a few hundred people living beyond their means, but millions and millions? We go back to the failed “model”, survival of the fittest, dog-eat-dog CAPITALISM.
Protect the rich, and squeeze the poor…


It’s rather scary that you believe we live in a world where individuals have zero responsibility for their actions.  Banks may be greedy and did things that were crimes, but come on.  It doesn’t take a genius to figure out that having $20,000 of credit card debt, absolutely no savings in the bank, and a giant mortgage is a bad idea.  It just takes a little common sense.  You don’t have to be a banker to live conservatively (not that they did!)

You can’t believe millions could live beyond their means?  Really?  Is it that hard?  Can you believe millions are overweight because they don’t feel like managing their diet and exercising even if they will die faster?  Or that millions around the world believe 9/11 was an inside job?  Or that millions of people supported Hitler’s attempt to exterminate the Jews?  Come on.  History has proven that humanity is prone to excesses all the time.  Self-control, common sense, and sanity are not givens.

Capitalism may be tough, but there aren’t really any success stories involving entirely state-controlled economies.  You are argue about what is too important to leave to the market, but societies without rewards for taking risk are societies without progress.

I agree with Jean, it does seem hypocritical to leave these struggling workers who have already faced foreclosure only to then possibly lose their job.

If what you say is true then some of our elected officials should definitely be gone.  I know the Congressman for my district here in Missouri had not paid his taxes for several years and was still elected anyway (and there are reasons why but thats another problem).  That didn’t stop him from becoming a Congressman, why not?

If these people have already lost their homes then chances are they are trying to move on, probably renting somewhere for less money and with fewer obligations of upkeep.

The hypocrisy is the who thing.  The bankers who are on the first line offender lists aren’t hurting, in fact reports are they had another highly profitable year.

So, yes, my reaction is this sucks big time.

The job of the defense department, CIA, military, etc. is to defend us.  It is not to make sure everyone has a job.  Its policies should reflect its primary goal.  It does “suck” big time that someone could lose their job who is already in debt.  But it would “suck” a lot more for someone to tell North Korea how to build a better nuclear bomb or tell Pakistan how to build a better missile.

Sounds like a clear case of discrimination to me. Jobs denied on the basis of credit on the assumption that someone will break the law. Absurd. Sue the rats!!!!!!!!!!

Ira—I think you need a refresher in your legal theory as it relates to discrimination.  People with poor credit are not a protected class under the law last time I checked.  Thus, employers can legally discriminate against them if they wish.

No one is saying that everyone with poor credit is a criminal or a potential bad apple.  Just that, all other things equal, giving clearances to people with a lot of debt caused problems in the past so the government chooses to only provide security clearances for sensitive material to people with a lower chance of selling secrets to our enemies to pay off their loans.  How is it so difficult to comprehend that this makes sense?

If you want a job that requires a high level of responsibility, show a high level of responsibility in managing your personal affairs.  It’s pretty simple.

I lost my job because of a clearance denial.  Student loans im trying to pay off. But hey the DOD can give rich nut job doctors Secret clearance, who shoot up ft hood.

Paul, people are a protected class. You need the legal refresher.  But we are based soley on guilty until you can prove beyond any shodow of a doubt your innocence. Unfortunately we’ve evolved to this and someday it will cause our demise.

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