Ed DeMarco is the number one obstacle to solutions for struggling homeowners across America. He’s an extremist who uses his position to repeatedly side with Wall Street.
Despite the FHFA’s own study saying that we could save taxpayers a billion dollars and keep families in their homes by resetting home loans, DeMarco today clung to his out of touch do-nothing position. If Mr. DeMarco will not change his mind, we need to change his job.
Tell President Obama to fire Ed DeMarco, Federal Housing Finance Agency Director, and appoint someone better.
from Paul Krugman
OK, I’ve slogged through the technical appendix (pdf) from the FHFA on the proposed debt relief, and while it’s eye-glazing reading, it makes DeMarco’s stonewalling even more outrageous.
The key point is that in the agency’s base case (Table 11) taxpayers actually gain $1 billion from loan modifications, because they reduce the number of defaults. And the FHFA gains $3.7 billion, because of aid from Treasury.
Now, DeMarco argues that “strategic defaults” — people deciding to stop payments on underwater homes in the hope of entering the program — could turn this into a net loss for taxpayers. Maybe, although there’s very little evidence that this would be important — and as I’ve already emphasized, you should also take the positive effect on the economy, and hence on revenue, into account. More to the point, it would take a lot of strategic defaulting to turn the thing into a loss for the FHFA, as opposed to taxpayers more generally. And DeMarco is, once again, charged with running his agency, not making national fiscal policy.
So we have an administrator refusing to implement the president’s policy, even though it would actually improve his agency’s finances, and even though his own staff says that it would probably help the federal budget as a whole too, because he doesn’t feel like it.
Now, there’s a running discussion of whether Obama can in fact fire DeMarco. Because DeMarco is civil service, he can’t be kicked into the street, but that’s irrelevant — he can be put into an equivalent-salary job at the Small Animals Administration, or something. It’s true that unless he not only wins but wins very big, Obama probably won’t be able to get a new head confirmed by the Senate — Republican stonewalling is the reason DeMarco is still there — but he can do a recess appointment.
I’m less clear on whether Obama can move before the break, and hence before the election; he might be able to, since DeMarco is only an acting head, never confirmed himself. But a few months won’t make that much difference.
One question being asked is why Obama didn’t replace DeMarco long ago. Well, the uncomfortable truth, as many people are pointing out, is that the administration — and Tim Geithner in particular — seemed indifferent or even hostile to debt relief for a long time. That was a big mistake. But it’s also in the past, and the administration has now seen the light. So it’s time to move on the FHFA.