WASHINGTON Feb 7 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
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.