BLOG VIEW: There is an old joke that claims the only indestructible forces that will be able to survive a nuclear war are Styrofoam, cockroaches and Cher. I might add a fourth potential survivor to that list: Edward DeMarco, who was named to the interim post of acting director of the Federal Housing Finance Agency (FHFA) in August 2009 and has been running the agency ever since.
Back in December, the Obama administration's spinmeisters planted a story in the Wall Street Journal stating that it would replace DeMarco during the early part of this year. Two months have passed since that news item appeared in print, and DeMarco is still at the FHFA, with nary a peep from the Oval Office about potential replacements. But that's not the first time that the White House has tossed about dubious promises about replacing DeMarco – and despite the planted story insisting that he is being moved to the exit ramp, DeMarco perseveres in his job.
Why hasn't the administration replaced DeMarco? For starters, it would obviously need to replace him with an FHFA chief that supports Obama's housing finance reform strategy. There's just one itty-bitty problem: After more than four years in power, the president has never offered anything that even vaguely resembles a housing finance reform strategy. (In fairness, neither has the GOP leadership on Capitol Hill – if the dueling political parties share anything, it is an acute sense of irresponsibility.)
Of course, the idea of presenting a candidate that will appeal to all sides of the political environment is challenging. The Democratic leadership in Congress would love to have an FHFA leader who will give the green light for principal reduction on loans guaranteed by Fannie Mae and Freddie Mac. The Republicans would clearly not buy into that game plan, nor would they want a regulator who could be considered as an Obama administration puppet – indeed, some of Richard Cordray's credibility problems as the head of the Consumer Financial Protection Bureau (CFPB) has been pegged to his frequent presence at the White House.
Also, there is the problem of getting somebody that actually wants to run the FHFA. That aforementioned story in the Wall Street Journal dropped such names as Susan Wachter, a professor of real estate finance at the University of Pennsylvania's Wharton School, and Michael Stegman, a housing finance advisor to the Secretary of the Treasury, as possible FHFA directors. While both individuals command a great deal of respect, it seems unlikely that either would be willing to leave their high-profile positions and torture themselves with such a Sisyphean task.
However, we need to stop and ask: Why would Obama want to replace DeMarco? After all, the president has been able to stick the blame for the pokey housing market recovery on the FHFA leader rather than assume responsibility for the ongoing problems. Besides, Obama could have easily made a recess appointment to fill the FHFA top spot at the same time that Cordray received his recess appointment to run the CFPB. (Yes, it would have been unconstitutional, but we'll save that thought for another day.)
Also, DeMarco has yet to offer any hint that he's tired of the job. He's had ample opportunity to walk away from the FHFA – or run away screaming, depending at how you look at his duties. Nonetheless, he's still plugging away at his work with no public complaints.
Although we will probably never get to see DeMarco and Cher drinking from Styrofoam cups while kicking aside cockroaches in the aftermath of a nuclear war, we need to admit that he's more than able to hold his own in the partisan wars that have consumed Washington. And perhaps his continued stewardship at the FHFA reaffirms a beloved old proverb: If it ain't broke, don't fix it!
– Phil Hall, editor, MortgageOrb
(Please address all comments regarding this opinion column to hallp@mortgageorb.com.)
