Economic News

California Congress members urge Obama to appoint permanent FHFA director

by Broderick Perkins

(1/16/2012) - More than two dozen U.S. House of Representatives Democrats from California are asking President Barack Obama to make another end run around stonewalling Republicans, this time for the sake of the housing market.

In a recent letter authored by U.S. Representative Dennis Cardoza (D-Merced, CA) and signed by 27 other House Democrats from the Golden State, the group urged the president to nominate a permanent director for the Federal Housing Finance Agency (FHFA), Fannie Mae and Freddie Mac's regulatory agency.

The letter says Edward DeMarco, appointed as FHFA's acting director in August 2009, is more concerned with saving Fannie and Freddie, rather than bringing relief to the housing market. Senate Republicans, notorious for a "no"-based policy of obstinacy, have blocked the appointment of the position for two and a half years.

After mortgage losses mounted in September 2008, the government seized Fannie Mae and Freddie Mac, two congressionally chartered companies charged with providing liquidity to the U.S. housing market.

"We urge you to act on behalf of the American people and immediately make an appointment for the Director of the FHFA. For two and a half years, Senate Republicans have been blocking the appointment of this position, causing there to be no permanent Director. The FHFA regulates and oversees Fannie Mae and Freddie Mac, which together hold 70 percent of mortgages in the US. The current economic crisis began in the housing market and our economic recovery is dependent on the important work pending before the FHFA. It is time to move forward and put in place a permanent FHFA Director," the letter said.

California has one of the hardest hit housing markets, and its elected officials have otherwise gone rogue to bring relief to the state's housing market and consumers.

The Representatives' appeal to President Obama was specifically aimed at encouraging him to again use special powers to make an appointment over the head of the U.S. Senate, which typically must approve presidential appointments. When the Senate is in recess a president can appoint officials otherwise requiring a Senate vote of approval.

Earlier this month, wary of Republicans' fiddling while the economy burned, President Obama used Senate recess appointment powers to put Richard Cordray in place to head the Consumer Financial Protection Bureau (CFPB). The CFPB was born of the massive Dodd-Frank Wall Street Reform Act as a consumer watchdog to ward off the kind of financial industry misadventures that helped put the economy in the tank.

"As the fiduciary of government-backed entities, there are steps that the FHFA can take to help prevent future foreclosures while also protecting taxpayers. 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. We appreciate your recent appointment of Richard Cordray as the new Director of the United States Consumer Financial Protection Bureau over similar Republican opposition and we urge that you take the same action to put in place a permanent Director to the FHFA," the letter said.

In November 2010, the Obama administration nominated North Carolina's banks commissioner Joseph Smith, to head the FHFA but he withdrew his name a few months later due to, what else, unrelenting Republican opposition. The administration has since named no new nominees.

"It is clear that we must take immediate steps to prevent more foreclosures. As part of the FHFA's ability to promote policies that will prevent foreclosures, they have the authority to establish rules over residential mortgages that Fannie Mae, Freddie Mac and other government enterprises are able to underwrite. FHFA has consistently and erroneously interpreted its mandate far too narrowly and as such has failed to take adequate action to help homeowners and has brought an end to successful, "

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