WASHINGTON (Reuters) - Dozens of House Democrats called on Thursday for President Barack Obama to unseat the regulator of mortgage giants Fannie Mae and Freddie Mac, saying he has failed to take the aggressive steps needed to help the U.S. housing market.
The group of 45 Democrats, led by Representatives Elijah Cummings and John Tierney, expressed disappointment that Edward DeMarco has been running the Federal Housing Finance Agency in an acting capacity since 2009. In their letter, the lawmakers urged Obama to immediately nominate a permanent director.
“Your re-election is a prime opportunity to put forth a new candidate who is ready and willing to implement all of Congress’ directives to meet the critical challenges still facing our nation’s housing finance markets,” the letter stated. “We strongly urge you to nominate an FHFA director who is ready to fulfill this mission.”
Fannie Mae and Freddie Mac, two congressionally chartered companies charged with providing liquidity to the U.S. housing market, were seized by the government in September 2008 as investments on risky loans mounted. The bailout has cost taxpayers almost $190 billion.
DeMarco, a career civil servant, has remained in an acting role, mainly because Senate Republicans have blocked White House attempts to replace him with a political appointee.
The Democrats argued DeMarco has not provided enough aid for struggling homeowners, and they criticized his decision to block Fannie Mae and Freddie Mac from reducing loan principal for borrowers who owe more than what their homes are worth.
DeMarco has refused to allow Fannie Mae and Freddie Mac to forgive mortgage debt on loans they back, despite pressure from the Obama administration. The administration went so far as to offer federal support to cover some of the costs that Fannie Mae and Freddie Mac could incur.
DeMarco, however, concluded a principal reduction program would be too risky and the benefit too small.
The Democrats, reviving critiques they launched last year, said DeMarco had taken too narrow a view of his mission to protect the financial health of the two firms. They said his actions at the FHFA show that he has “declined to fully and effectively implement” the law.
“Ensuring that FHFA implements congressional directives to support the most liquid, efficient, competitive, and resilient housing finance markets is a matter of national urgency,” the letter stated.
Obama is likely to face political pushback from Republicans if he tries to name a new FHFA director, making it all the more likely DeMarco will remain in his post for the time being. DeMarco has indicated that he has no plans to leave.
The Obama administration nominated North Carolina Bank Commissioner Joseph Smith as the FHFA’s permanent director in November 2010, but he withdrew his name a few months later due to staunch Republican opposition. The administration has not named a new nominee since.
“Today’s letter confirms the growing worries surrounding the current direction of FHFA, while emphasizing the immediate need for a strong leader at FHFA who is willing and able to tackle the critical challenges facing the housing sector,” said a press release from the 45 lawmakers writing to Obama.
Reporting by Margaret Chadbourn; Editing by Lisa Von Ahn