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Edward DeMarco, the acting director of the Federal Housing Finance Agency, on Tuesday defied both the Obama administration and widespread expectations that he would cave to a torrent of political pressure and allow Fannie Mae and Freddie Mac to offer principal reductions to troubled borrowers.
July 31 -
Joint federal and state effort to probe securitization practices leading to crisis will include information-sharing.
January 27
WASHINGTON — Liberal groups on Thursday ratcheted up their pressure on the Obama Administration to respond more forcefully to the foreclosure crisis.
In conference calls with reporters, housing activists and other progressives asked the president to replace Edward DeMarco as head of the Federal Housing Finance Agency, and called on the Justice Department to dedicate more resources to its investigation of the origins of the crisis.
Calls for DeMarco's ouster have intensified since he announced recently that he will not allow principal write-downs on Fannie Mae and Freddie Mac mortgages.
The president's options are limited by the fact that DeMarco is the head of an independent agency, as well as by the widespread expectation that Senate Republicans would block any nominee to replace him. Analysts believe that Obama is unlikely to take action.
Still, the activists argued Thursday that the president can remove DeMarco as the agency's acting director and install his replacement through a recess appointment. They pressed Obama to take action while Congress is away from Washington in August.
"He can demote him. He can appoint a recess appointment," Tracy van Slyke, co-director of The New Bottom Line, a campaign that aims to challenge the interests of big banks, said on a conference call. "He needs to show homeowners and the American public at large that he's fighting for us, and not for Wall Street."
In a separate call with reporters, Leo W. Gerard, international president of United Steelworkers, made a similar argument.
"We really do believe that this is an economic opportunity that's being held back by one guy," Gerard said. "I think it's important to build the momentum for him to go sooner rather than later."
One seemingly unlikely advocate for DeMarco's removal is Michael Brune, executive director of the Sierra Club. He joined the housing activists Thursday because of FHFA's decisions related to energy upgrades of Fannie and Freddie homes.
Thursday's conference calls came on the six-month anniversary of the national mortgage settlement. The housing activists voiced their displeasure with the progress made since then by the Justice Department's Residential Mortgage-Backed Securities Working Group, which was formed around the time the settlement was announced to investigate fraud and abuse that led to the 2008 crisis.
The working group
But according to Brian Kettenring of the Campaign for a Fair Settlement, which has been advocating for affected homeowners, the resources dedicated so far are well short of what is necessary.
Kettenring said that the Justice Department's investigation into alleged perjury by baseball great Roger Clemens — who was eventually acquitted — involved 93 investigators. And he argued that there is little publicly discernible progress in the mortgage investigation.
"We badly want it to succeed. We still think it can succeed," Kettenring said. "But we're not seeing the signs that we would want to see."
He was seconded by Simon Johnson, a former chief economist at the International Monetary Fund who is now a professor at the MIT Sloan School of Management.
"We need a full, fair, and complete investigation," he said. "It's a very big problem to be investigated fully, but it's absolutely standing in the way of a robust economic recovery, of jobs coming back, and of the housing market recovering."
