January 11, 2012 / 5:57 PM / 9 years ago

House Democrats want new housing regulator

WASHINGTON (Reuters) - More than two dozen House Democrats called on Wednesday for President Barack Obama to unseat the acting regulator of housing finance agencies Fannie Mae and Freddie Mac, saying he has failed to take steps that would aggressively address the nation’s housing crisis.

The group of 28 Democrats, led by Representative Dennis Cardoza, are all from California, which has been hard hit by the housing market’s collapse. In their letter, the lawmakers urged Obama to replace Edward DeMarco as acting director of the Federal Housing Finance Agency and to immediately nominate a new director.

“FHFA has consistently and erroneously interpreted its mandate far too narrowly and as such has failed to take adequate action to help homeowners,” the letter said.

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 mortgage losses mounted.

DeMarco, a career civil servant who was named acting director of the FHFA in August 2009, has defended the steps he has taken as conservator as being well within the authority Congress has mandated.

DeMarco, who has never been selected as the FHFA’S permanent director, has argued that the roughly $169 billion in taxpayer-funded support paid out to Fannie Mae and Freddie Mac since they were seized was meant to get them back on their feet, not to provide relief to the housing market.

The Democratic call for a new leader at FHFA comes just days after Obama made a critical recess appointment of Richard Cordray as the director of the newly created Consumer Financial Protection Bureau over Republican opposition.

“We urge that you take the same action to put in place a permanent director to the FHFA,” the Democrats wrote.

The lawmakers said DeMarco has limited Fannie and Freddie from helping the troubled housing market by taking too narrow a view of his mission to protect the financial health of the two firms.

“There are steps that the FHFA can take to help prevent future foreclosures while also protecting taxpayers,” the letter read. “Installing a permanent director of the FHFA will allow the FHFA to move forward to make key decisions that will help keep families in their homes and improve our economy.”

The Obama administration had nominated North Carolina’s banks commissioner, Joseph Smith, to be the FHFA’s permanent director in November 2010, but Smith withdrew his name a few months later due to staunch Republican opposition. No new nominee has since been named.

Reporting By Margaret Chadbourn; Editing by Leslie Adler

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