FHFA's DeMarco to be Replaced Early Next Year: WSJ

The Wall Street Journal is reporting that the Obama Administration is planning to name a permanent Director of the Federal Housing Finance Agency, perhaps as soon as the beginning of next year.    Nick Timiraos reports that, while the White House has declined comment, sources familiar with the Administration say officials are gathering names of potential nominees but have not yet whittled it down to a short list or interviewed anyone for the post.

Edward J. DeMarco has been Acting Director of FHFA since August 25, 2009, replacing James B. Lockhart, III who had overseen the transition of the former Office of Federal Housing Enterprise Oversight into FHFA.  President Obama had nominated Joseph Smith Jr. to be director but the Senate made it clear that no nominee the President put forward would be confirmed.

FHFA is conservator of Fannie Mae and Freddie Mac (the GSEs) and DeMarco has earned both praise and vilification for the job he has done there.  There have been calls from some liberal organizations for the President to fire him for FHFA's performance during the housing and subsequent foreclosure crisis and these calls grew as DeMarco stood firm in his decision to forbid the GSEs to include principal reduction as a method of loan modification. 

On the other hand, The Journal points to a warm reaction received by DeMarco last week at a SIFMA conference and to the praise he has received from "mortgage traders, congressional Republicans, and some industry executives (who) have lauded Mr. DeMarco as a principled adherent to the law and steward of taxpayer dollars.'

Despite the problems the President had appointing an FHFA Director and in getting other sub-cabinet level positions confirmed, the Journal says a recess appointment is unlikely because it would risk angering Senate Republicans during Fiscal Cliff negotiations and poisoning the well ahead of a number confirmations of higher ranking officials going into the President's second term.

Timiraos lists several names of possible replacements for DeMarco including:

• Susan Wachter, professor of real-estate finance at the University of Pennsylvania's Wharton School;
• Michael Stegman, an advisor to Treasury Secretary Timothy Geithner on housing finance;
• Jonathan Fiechter, deputy director for monetary and capital markets at the International Monetary Fund

The Journal says, "Replacing Mr. DeMarco could give the administration greater latitude to expand initiatives to refinance underwater borrowers or to embark on a tailored principal forgiveness program. Any replacement would also play an important role guiding any process of overhauling Fannie and Freddie as the administration prepares to unveil more details about its preferred course."

Before becoming Acting Director DeMarco had served as FHFA's Chief Operating Officer and Senior Deputy Director for Housing Mission and Goals since FHFA's inception in 2008 and in the same positions at FHFA's predecessor agency from 2006.  He served earlier in the Social Security Administration and the U.S. Treasury.