Let me introduce you to Ed DeMarco. He is the acting director of the Federal Housing Finance Agency, which was created in 2008 to oversee Fannie Mae and Freddie Mac. Mr. DeMarco has held this position since 2009 when the original director left.
Mr. DeMarco’s job is to preserve the assets of Fannie and Freddie, who made a practice of loaning money to people in the housing market who couldn’t ever begin to pay back the loans. By now you know that Congressman Barney Frank’s (D. Ma.) assurances to the contrary notwithstanding, Fannie and Freddie have cost you, the taxpayer, some $141 billion in losses.
Mr. DeMarco, however, is not well liked by the Democrats, so much so that President Obama, in 2010 nominated someone else for the job, someone who appeared to be far more agreeable to the administration’s wishes. You can be thankful that the Republicans stymied his appointment. And here is why.
With little to run on, the Democrats need an accomplishment, any accomplishment. Their fondest dream is to develop a government program that would allow for the forgiveness of principal due on loans backed by Fannie and Freddie…you owe $100,000, poof, we’ll reduce that to $50,000. Think of the votes, who cares about the cost to the taxpayers, or the unfairness to those who are repaying their loans.
Fortunately, Mr. DeMarco takes his job as conservator seriously.
A group of 17 House Democrats met with Mr. DeMarco in early October and went bananas when he refused to roll to their demands [to write off loan principal].
Then Larry Summers, the former director of the president’s National Economic Council, penned a Washington Post opinion piece claiming that:
…the best way for Mr. DeMarco to preserve Fannie and Freddie assets is to throw their (taxpayer) money at a ‘national housing recovery.’
And, were that not enough, this past week, 19 members of the House again met with Mr. DeMarco to demand that he institute a program to write down loan principal.
But, when it comes to principal foregiveness, says Mr. DeMarco, there is no ‘upside’ to taxpayers—the lenders lose whether the borrower fails or succeeds. ‘If Congress wants to appropriate money’ to pay for the program ‘that changes the calculus.’ Until then, he doesn’t view principal forgiveness as within his ‘statutory mandate.’
Of course, Congress would never approve such an appropriation of taxpayer money, thus the continuing pressure on Mr. DeMarco to waste more of your money to either secure votes, or pay off those who will secure votes.