Ezra Klein: The most powerful man in housing policy

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The most powerful man in housing policy
By Brad Plumer and Ezra Klein


(Chris Rank - BLOOMBERG)

The most powerful man in housing policy today isn’t President Obama. It’s not Treasury Secretary Timothy F. Geithner or House Financial Services Chairman Spencer Bachus (R-Ala.). It’s a little-known bureaucrat named Edward DeMarco.

DeMarco is the acting director of the Federal Housing Finance Agency. Which means that, under the terms of the 2008 Housing and Economic Recovery Act, DeMarco is in charge of supervising mortgage giants Fannie Mae and Freddie Mac. So any attempts the Obama administration might make to use Fannie and Freddie to stabilize the housing market run directly through DeMarco’s office. And in many of the attempts it has made, the Obama administration has not exactly found DeMarco to be a willing partner.

All through the fall and winter, the Obama administration tried to pressure Fannie and Freddie to join a program that would allow banks and other creditors to write down mortgages. But in April, DeMarco finally put his foot down, telling Congress, “It has been our conclusion that it is not loss minimizing for Fannie and Freddie.” The administration has also attempted a number of programs to help distressed homeowners refinance or otherwise save their mortgages, but DeMarco’s insistence on tightening Fannie’s and Freddie’s lending standards and avoiding losses has undercut their effectiveness.

Even DeMarco’s critics agree that he’s been left in a very unusual position. “DeMarco is a very able guy, but he’s a career appointee, designated by the Bush guy who left, and he should have been replaced by a policy appointee reflecting the broader concerns,” says Rep Barney Frank (D-Mass.) who, as the top Democrat on the House Financial Services Committee, has dealt with DeMarco extensively. “Unfortunately, he wasn’t.”

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