This week President Obama tapped democratic congressman Mel Watt to lead the Federal Housing Finance Agency, overseeing Freddie Mac and Fannie May. The appointment is stirring up partisan housing debates in Washington, as Watt would be replacing Edward DeMarco, whose steadfast resistance to mortage-slashing measures has led to Republican trust.
The pressure on Obama to replace DeMarco has been mounting ever since he blocked a White House proposal for partial-debt forgiveness to those whose mortage debts have exceeded the value of their home. The Congressional Budget Office has announced that such a measure would reduce foreclosures and potentially save the government money, but DeMarco argues that there are still other remedies to the mounting debt of distressed homeowners that don’t threaten taxpayers to the same degree. Democrats, along with consumer and housing advocacy groups, are demanding a change in power to someone who supports measures to help those being crippled by debt.
Obama, however, faces an uphill battle to replace DeMarco. He first attempted to do so in 2011 with the appointment of banking commissioner Joseph Smith, but was met with Republican opposition and withdrew the nomination. Before tapping Watt for the position, Obama was considering economist Mark Zandi, but even his former position of adviser to John McCain was not enough to appease Republicans. In order for Watt’s nomination to pass through the Senate, Democrats will need to gain some Republican support, and that will be hard to do.
Early Republican reluctance leads me to believe that the process will be a slow one, but it will be interesting to see how real estate politics shift should DeMarco be replaced by Watt.