Obama Administration Finally Considers Firing Housing Regulator Who Blocked Aid For Homeowners

The Financial Times’ Shahien Nasiripour reported that the Obama administration is telling housing advocates that it will remove Edward DeMarco, acting director of the Federal Housing Finance Agency, if Obama wins a second term:

If Mr Obama wins re-election, Mr DeMarco’s days may be numbered, with senior White House officials quietly telling housing industry activists in recent weeks that he will be replaced. […]

He temporarily was named acting director of the Federal Housing Finance Agency in August 2009 by Barack Obama, US president, after the previous director left for the private sector.

He is still there three years later, despite clashes with the White House and the Treasury department over various administration proposals to aid the housing market.

The FHFA is responsible for regulating government backed mortgage giants Fannie Mae and Freddie Mac. As acting director, DeMarco has prevented Fannie and Freddie from reducing mortgage principal for troubled homeowners, even though studies have shown that principal reduction is the most effective policy for keeping families in their homes and will save taxpayers money in the long run. DeMarco has also absurdly claimed that reducing principal to avoid foreclosure would be too much of a boon to big banks for the government to consider.

Treasury Secretary Tim Geithner responded to DeMarco’s call on principal reduction by saying, “I do not believe [the FHFA’s decision] is the best decision for the country.” According to the Financial Times, the administration is considering recess-appointing DeMarco’s replacement, as Senate Republicans seem intent on blocking any nominee who ever even considered principal reduction as a viable strategy.