Legislators Lobby to Replace Acting Director of the FHFA

FHFA Acting Director Edward DeMarco may not be smiling in the coming weeks, if he is indeed replaced at the agency.

A number of legislators in the House of Representatives are hoping that what worked for the Consumer Financial Protection Bureau (CFPB) will work at the Federal Housing Finance Agency (FHFA).

Twenty-eight congressmen, led by Dennis Cardoza, a Democrat from California, have sent President Obama a letter asking him to use his recess appointment powers and install a new, permanent director of the FHFA, much like he did in appointing Richard Cordray head of the CFPB  after months of congressional gridlock.

“For two and a half years, Senate Republicans have been blocking the appointment of this position,” the letter said. “It is time to move forward and put in place a permanent FHFA Director.”

Edward DeMarco, who is the FHFA’s acting director, has been the source of numerous controversies and conflicts with members of Congress since his appointment in 2009. Labelled the “most powerful man in housing policy,” DeMarco has straddled an uncomfortable line as director, attempting to promote both the fiscal soundness of Fannie Mae and Freddie Mac (the GSEs he governs) and the overall health of the housing industry.

Thus, DeMarco has resisted congressional efforts to aid homeowners for the sake of Fannie and Freddie’s budgets, especially in the form of principal write-downs on underwater homes, a move that has garnered not just the ire of legislators (Cardoza’s letter specifically mentioned it), but the criticism of analysts as well, some of whom have described DeMarco’s tactics as “obstructionism.”

By replacing DeMarco with a permanent director – and one with a decidedly more sympathetic view on housing policy – the legislatures argue that housing will in turn benefit.

“It is clear that we must take immediate steps to prevent more foreclosures,” the letter said. “FHFA has consistently and erroneously interpreted its mandate far too narrowly and as such has failed to take adequate action to help homeowners.”

The White House has not yet commented on whether it will seek a recess appointment for the FHFA. Senate Republicans have argued that the recess appointment of Cordray to the CFPB was unconstitutional, but the Department of Justice did rule yesterday that the president does have the legal authority to make such appointments.

Congress fully reconvenes on Jan. 23.

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