HUD chief plays long game on housing

Shaun Donovan has worked in the highest reaches of housing policy, with time spent in the last three presidential administrations and as New York City’s housing commissioner.

And while Donovan, the secretary of Housing and Urban Development (HUD), says he has fond memories of all his past stops, he seems to have found a kindred spirit in President Obama.

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“I’m a big believer in the president’s mantra of no drama,” Donovan said in a sit-down interview with The Hill. “I don’t lose my cool. I don’t yell and scream. I’m a big believer in respecting and listening to people and working across as broad a group as I can.

“I’m not an ideologue,” said Donovan, who stayed on for a short time in the George W. Bush administration after serving at HUD under President Clinton. “I will work across party lines.”

Donovan is grappling with weighty problems at HUD as housing continues to drag down the economy. Lawmakers are at odds over what should be done to repair the damage from the real estate crash, and quick policy fixes are in short supply.

That’s part of the reason the secretary says he’s in it for the long haul — potentially even into a second term, should Obama win reelection.

“If he asked me to stay, I would certainly be happy to keep serving,” Donovan said.

Even with the current policy clashes, lawmakers who do not agree on much — such as Reps. Jeb Hensarling (Texas), the chairman of the House Republican Conference, and Maxine Waters (D-Calif.) — have kind words for Donovan.

Hensarling, also the vice chairman of the House Financial Services Committee, said he has disagreed with Donovan on a range of policy issues, but also called him an “honest broker” and said he is “highly respected on our side of the aisle.”

And Waters, a senior Democrat on Financial Services, said that while she has taken issue with some of the administration’s approaches to housing, Donovan had gone a long way to clean up what she called the “mess” at HUD. 

“Perhaps he’s the best secretary the president has,” she said.

It remains to be seen whether Donovan will be able to keep above the fray, especially with politically charged decisions looming on the future of the nation’s housing finance system.

One of Donovan’s most strident critics in Congress has been a member of his own party: Rep. Dennis Cardoza, who said last year that the secretary had not taken foreclosures in his California district seriously enough and that he had lost confidence in Donovan.

Cardoza, a Blue Dog Democrat, still believes Donovan — and the Obama administration in general — have arrogantly turned their back on his constituents. “As housing secretary, you should care if people are losing their houses,” he told The Hill.

Despite his no-drama reputation, Donovan isn’t afraid to throw elbows. During the interview with The Hill, he responded aggressively to a Washington Post series that asserted a HUD affordable-housing program was mismanaged and wasteful.

Donovan said the investigation — which alleged that HUD turned its head as hundreds of millions of dollars’ worth of housing projects for the poor stalled — had “no perspective” and was “seriously flawed.”

The HOME program, the block-grant initiative that was the subject of the Post investigation, provides roughly $2 billion a year to state and local jurisdictions. In its series, the paper found that close to 700 projects, totaling around $400 million, are not progressing.

Donovan took issue with that claim and said his department had reviewed almost all of the projects in the Post examination and found that more than half were complete and another quarter are moving forward. And, he added, while local agencies had the oversight responsibility for projects started with the block grants, HUD had aggressively tried to recapture misspent HOME funds.

“To be clear, from the time we came in, we recognized that we needed to increase oversight. And we’ve done an enormous amount to improve the way the HOME program operates,” Donovan said. “Does that mean there aren’t further things that we can do? We have further plans to continue to improve the oversight of the program.”

A spokeswoman for the Post said the paper stood by its reporting.

Donovan said his department had been active in reaching out to top lawmakers to discuss the HOME program, with members of several congressional committees interested in taking a look at it.

One area where HUD and the administration have not been as proactive on Capitol Hill is the proposed revamping of the housing finance market.

In a February report, HUD and the Treasury Department called for a wind-down of Fannie Mae and Freddie Mac, the government-sponsored enterprises that have played a huge role in the mortgage industry.

In that report, the two departments laid out three options for the future of the system. Donovan said the administration believes its job right now is to play more of an advisory role.

“Ultimately, Congress is going to decide, because we need legislation, where we come out,” Donovan said. “The phase we’re going really through now is to see whether there can be a consensus in Congress around one of those options, and we’re here to help explain and make clear what the costs and benefits of each of those options is.”

For now, at least, Democrats said that approach makes sense.

“Excuse me, the Republicans are in charge of the House. They were telling everybody that they knew what to do about Fannie and Freddie,” said Rep. Barney Frank (D-Mass.), the ranking member on the House Financial Services Committee. “I think it’s entirely legitimate to say, ‘Well, what do you guys want to do?’ ”

On the other side of the aisle, Hensarling and Rep. Scott Garrett (R-N.J.), also a top House Financial Services member, said the administration would eventually have to get more involved. Garrett added that he believed that would happen, and that it could help Republicans come together.

As it stands, some GOP lawmakers have called for housing finance to be an entirely private operation, with others still seeing a role for the government to play. Republicans on Financial Services have introduced a series of bills that would ultimately privatize or eliminate Fannie and Freddie.

“We can’t be in this situation two years from now,” Garrett told The Hill. “A year from now, if you and I are having this same conversation, my answers might be different.”

Donovan expects to be a part of the emerging discussion. His family moved to the Washington area last summer, after he spent the first 18 months of his tenure commuting back and forth to New York.

The secretary is also looking for ways to increase communication in the department, after spending time in New York City’s so-called bullpen — the open-workspace arrangement made famous by Michael Bloomberg, the city’s mayor.

“This is not a game that’s won in a day or a week or a month or a year,” Donovan said. “And I’m here for the long haul.”


Vicki Needham contributed.