SANTA BARBARA, California (Reuters) - Federal Reserve Governor Elizabeth Duke on Friday signaled that she would stay in her post past the expiration of her term on January 31, saying she planned to work on banking and housing issues for the “foreseeable future.”
Speaking at a banking seminar, Duke noted that Fed governors can serve until replaced and added, “I‘m now heavily focused on issues of community banks and housing, and will continue to be for the foreseeable future.”
Duke has taken a leading role in advocating stronger action by lawmakers and policymakers to try to push the flagging housing sector onto a healthier track, warning that failure to do so potentially puts a broader economic recovery at risk.
There are already two vacancies on the Fed’s seven-person board. The White House said last month that President Barack Obama would nominate Harvard economist Jeremy Stein and former Treasury official Jerome Powell for those slots.
Duke, who came to the Fed with an extensive banking background, was on the speaking circuit on Friday saying the Fed was trying to streamline regulations affecting community banks to encourage more lending. One way to do so would be to ease how commercial real estate assets are rated, which might free up loan funds.
Duke’s position on community banks is consistent with her wider take that every effort should be made to ensure that banks
are able to meet regulatory requirements without hindrance to their ability to lend to consumers and would-be homebuyers.
She has cautioned against any “miracle cure” for housing markets, bedeviled simultaneously by a backlog of foreclosed properties and falling prices and advocated making Fannie Mae and Freddie Mac more potent players in housing’s bounceback.
That position puts her at odds with some lawmakers, particularly Republicans, who don’t want the two government-sponsored enterprises that have been in government conservatorship since 2008 put at risk of incurring new costs.
But Duke, who helped shape the ideas in a 26-page Fed White Paper presented to Congress at the beginning of the month, has staked out her ground firmly.
“Policymakers should at least consider policies that take into account the role the GSEs could play in hastening the healing of the housing market rather than focusing entirely on minimizing losses to the GSEs,” she told a Virginia Bankers Association event recently.
The Fed’s White Paper essentially says that Fannie Mae and Freddie Mac could boost recovery if they were allowed to provide cheaper mortgages to a broader pool of homeowners.
Duke has urged more refinancing options for troubled homeowners and converting some foreclosed properties into rentals in order to quickly cut down backlogs on the market.
Duke is the last remaining governor to have taken office during the administration of former President George W. Bush, though Fed Chairman Ben Bernanke came to power in that era and was reappointed by President Barack Obama.
Duke took office in August 2008, filling an unexpired term that ends on January 31.
Additional reporting by Glenn Somerville; Writing by Tim Ahmann and Glenn Somerville; Editing by Kenneth Barry