For too many American citizens, our country’s creeping economic stabilization is hollow. Ever since Wall Street and big banks crashed the economy, 14 million homeowners are underwater—owing more on their homes than what they are worth — while millions of others have already had their homes ripped away from them through unfair or avoidable foreclosures.
DeMarco is the acting director of the Federal Housing Finance Administration, which oversees Fannie Mae and Freddie Mac. Between those two entities, they hold or control more than half the mortgages in this country. Fannie Mae and Freddie Mac’s purpose are to allow all people to access affordable housing, not just the wealthy. But instead of people being able to remain in their homes, much less access an affordable house, DeMarco’s actions are driving millions of homeowners into unnecessary debt and foreclosure.
For the last few years, DeMarco has obstinately and ideologically opposed principal reduction/correction — resetting mortgages to fair market value — even though it’s been documented by FHFA, Fannie and Freddie themselves that this would be a good policy for homeowners and taxpayers. Principal reduction is the bold and fair policy we need at Fannie, Freddie and through the banks to fix the housing crisis, rebuild our communities, create jobs, and reset the economy.
But instead of moving on this policy, DeMarco basically told Congress and the White House to take a hike over the last year. Personally, I’m in favor of a little rebelliousness in DC politics, but not when the cost is millions of people,their homes and their families’ future. Let's be clear, this one man's actions are harming our economy and hurting taxpayers.
In the last few months, the New York Times called for DeMarco’s removal and the Financial Times and Huffington Post reported that the administration is ready to replace DeMarco. That’s the right direction, but the question is: when? DeMarco can’t be allowed to remain in office even six months from now. That’s why President Obama must announce a new nominee within the first 100 days of his second term.
President Obama was lambasted in his first term for not doing enough to deal with the housing crisis and its impact on our economy. If his second term is going to be any different, President Obama needs to nominate a new FHFA director in the first 100 days. With this one action, he will set the tone of his administration for the next four years. He will also simultaneously demonstrate that he is committed to rebuilding our economy, strengthening the middle class and supporting communities of color.
With DeMarco out of the way, the new FHFA director can work to move real policies that support homeowners and President Obama has made a significant contribution to resetting our economy. It’s a win-win solution.
Van Slyke is executive director of New Bottom Line.