WASHINGTON, March 18 A group of state attorneys
general on Monday called on the Obama administration to replace
the regulator of housing-finance giants Fannie Mae and
Freddie Mac, as the White House gets closer to naming
a new director to fill the post.
The group, nine attorneys general led by Martha Coakley of
Massachusetts and Eric Schneiderman of New York, said Edward
DeMarco, who has been running the Federal Housing Finance Agency
in an acting capacity since 2009, has not provided enough aid
for troubled homeowners.
In a letter to President Barack Obama and the Democratic and
Republican leaders of the Senate, the attorneys general
criticized DeMarco's decision to block Fannie Mae and Freddie
Mac from reducing loan principal for borrowers who owe more than
what their homes are worth, saying it was an impediment to the
U.S. economic recovery.
"Under the leadership of Acting FHFA Director Edward
DeMarco, Fannie Mae and Freddie Mac remain an obstacle to
progress by refusing to adopt policies that will help maximize
relief for struggling homeowners," Schneiderman said in a
statement released along with the letter. "The time has come for
the president and Congress to work together to install a new,
permanent leader at FHFA."
The White House is expected to name a replacement for
DeMarco within weeks, according to sources familiar with the
matter. The Wall Street Journal reported on Friday that
Representative Mel Watt, a North Carolina Democrat, was at the
top of the list of potential replacements but that a final
decision had not been made.
The White House declined to comment, as did a spokesperson
DeMarco has refused to allow Fannie Mae and Freddie Mac,
which help finance about two-thirds of new U.S. home loans, to
forgive mortgage debt on loans they back, despite pressure from
the Obama administration. The administration went so far as to
offer federal funds to cover some of the costs that
government-controlled Fannie Mae and Freddie Mac could incur.
The attorneys general cited a $25 billion government
negotiated settlement with five major banks a year ago as proof
that wide, but not deep, relief to U.S. homeowners is possible.
They want the White House to name an FHFA director who is
willing to pursue programs that would help Americans survive the
pain of foreclosure.
The White House had previously sought to replace DeMarco,
but a vote on the president's nominee was blocked by Republicans
and he eventually withdrew.
A new nominee would also likely face opposition from
Republicans, who remain concerned about the costs of the
taxpayer-funded bailout of Fannie Mae and Freddie Mac.
Fannie Mae and Freddie Mac, two congressionally chartered
companies charged with providing liquidity to the U.S. housing
market, were seized by the government in September 2008 as
losses on risky loans mounted. Their bailout has cost taxpayers