Liberal groups to White House: Scrap housing regulator

DeMarco has long been a target of liberals, who accuse the official of holding back the housing market and economic recovery by refusing to allow Fannie and Freddie to participate in certain housing relief programs. DeMarco was not appointed to his position, but rather is a civil servant who took over when the previous director, appointed by President George W. Bush, stepped down in August 2009.

Earlier this month, DeMarco announced the FHFA would not allow Fannie and Freddie to participate in principal reductions, arguing that such an effort is too risky and could cost taxpayers money. The decision brought rebukes from Donovan and Geithner, who called on him to reconsider.

Now, pressure is mounting on the White House from the left to remove DeMarco from power, potentially via a recess appointment while Congress is out for its August recess. In 2010, the White House had nominated a successor, Joseph Smith, but his nomination stalled in the Senate and he was not put forward again in subsequent years.

Liberals Thursday were at a loss as to why the White House has yet to replace him.

"He's single-handedly holding up tens, if not hundreds of thousands of jobs," said Jones. "What more evidence would they need to replace the acting director?"

Beyond blocking efforts to boost the housing market, the groups contend that DeMarco is also holding back a broader recovery that could be driven by the housing relief. They contend that if homeowners are given more relief, they will be able to pump more money into the economy.

"This guy has got to go," said Leo Gerard, international president of the United Steelworkers. "He's bad for the economy."

The pressure on DeMarco is also coming from the environmental sector, as Michael Brune, executive director of the Sierra Club, hit the regulator for blocking a housing program that would allow energy-efficient home renovations to be covered via property taxes. The program stalled after the FHFA under DeMarco aired legal concerns about the effort.

"We're not sure if DeMarco has an axe to grind, but we know that he's a problem," said Brune. "And we know that he needs to go."

The White House did not immediately respond to a questions about replacing DeMarco.