If President Barack Obama stays in the White House for a second term, a notorious Washington bureaucrat may be out.
White House officials have been telling housing activists that Ed DeMarco, the head of the Federal Housing Finance Agency, will be out if Obama wins re-election, the Financial Times reports. Obama named DeMarco acting director of the agency, which oversees government-backed mortgage giants Fannie Mae and Freddie Mac, in 2009. But the President has faced countless calls since then to oust him.
DeMarco refuses to back principal reduction, a loan forgiveness tactic that would help struggling homeowners pull themselves out of debt by lowering the principal on their mortgage loan. Though the Obama Administration and housing activists say that principal reduction would help to stop a glut of foreclosures weighing on the economy, DeMarco and other critics of the proposal argue it would incentivize struggling homeowners to stop paying their mortgages.
Many, from Elizabeth Warren to former FDIC chairwoman Sheila Bair, have said that the “moral hazard” argument doesn’t hold water, particularly when compared with the housing crisis that’s plaguing the economy. Yet DeMarco remains in his post, in spite of calls for him to step down or be fired due to his rigid stance. We’ll see if that’s still the case come December.
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