A band of progressive leaders joined the mounting calls to fire America's housing policy chief Ed DeMarco Thursday.

"You could have the biggest stimulus program in America by getting rid of one person," Van Jones, president and co-founder of the progressive group Rebuild the Dream and former White House adviser, said Thursday. "He is single-handedly holding up tens of thousands of jobs."

"This is the only issue that I can remember that Timothy Geithner and Paul Krugman both agree on," Jones added.

Jones joined Michael Brune, executive director of the Sierra Club, and Leo W. Gerard, international president of United Steelworkers, on a conference call Thursday to encourage President Barack Obama to fire DeMarco, who is acting director of the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac. DeMarco, a Bush administration appointee, has opposed offering a form of loan forgiveness, known as principal reduction, on mortgages held or guaranteed by Fannie Mae and Freddie Mac. The government-backed housing giants have a hand in about half of all outstanding mortgages.

DeMarco has argued on many occasions -- including in a recent, threatening notice to local governments that are considering using eminent domain to perform principal reductions -- that allowing this type of loan forgiveness would increase the risk of "moral hazard." DeMarco's argument is essentially that helping underwater homeowners might encourage others to default strategically in order to get help, too. DeMarco most recently rebuffed the White House's call for principal reductions in late July.

The administration has data to support the strategy. Studies have found that widescale principal reductions would save money for the government and help create tens of thousands of jobs. More than one in five borrowers are underwater on their mortgages, owing more on their home than the home is worth.

Jones said that principal reductions by Fannie Mae and Freddie Mac would enable a stronger economic recovery by giving underwater homeowners the financial freedom to buy refrigerators and sofas, remodel their homes and more. The boost in spending would pump money into the economy and create jobs, they said.

"The ability of people to write down their mortgages so that they reflect their current value would free up billions of dollars of worker opportunities to do something other than give banks money that who the hell knows goes where," Gerard said. "This is an economic opportunity to have money injected into the economy that otherwise is going to financial institutions that quite frankly don't need it."

Gerard said that principal reductions would even help banks, because homeowners who aren't underwater are less likely to walk away from their mortgages, and those continued mortgage payments would benefit the banks, reduce blight and prevent deterioration of home values.

Five major banks have already agreed to offer at least $10 billion in principal reductions to underwater homeowners as a part of the national mortgage settlement earlier this year. But some banks have been slow to pursue principal reductions so as to have time to repair their balance sheets, experts say.

Jones acknowledged that it may not be politically palatable to forgive the mortgages of homeowners whom some may view as undeserving. But the banks are to blame for the housing mess, Jones argued, and therefore should be forced to take on the risk to fix it.

"Some of these big banks ... are the ones who are not following the rules, and they're being rewarded for bad behavior," Jones said. "If we put a trillion dollars on the table to help the banks stabilize, this would be pennies to help families stabilize, and they're going to have a much more positive impact on the economy."

Jones speculated that Obama has not fired DeMarco yet because "there has been this misperception" that he could not. But Jones said that now it is "pretty clear" that Obama can replace DeMarco with another acting director through a recess appointment. Numerous news outlets have reached the same conclusion.

The FHFA did not immediately return requests for comment. A senior Obama administration official noted in an email that congressional Republicans blocked the president's nomination of Joseph A. Smith, then North Carolina's banking commissioner, to replace DeMarco without justification several months ago and that the administration supports principal reductions when appropriate.

This story has been updated to include a comment from a senior Obama administration official.

Related on HuffPost:

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  • Pro-Principal Reduction

  • Paul Krugman, Nobel Prize Winning Economist

    Nobel Prize-winning economist and New York Times columnist has repeatedly called for FHFA director <a href="http://krugman.blogs.nytimes.com/2012/07/31/fire-ed-demarco/" target="_hplink">Ed DeMarco to be fired</a> over his his opposition to principal reduction. In addition to arguing that principal reductions would benefit the overall economy, Krugman told his readers that "deciding whether debt relief is a good policy for the nation as a whole is not DeMarco's job."

  • Timothy Geithner, U.S. Treasury Secretary

    Treasury Secretary Timothy Geithner stated that principal reductions would help up to 500,000 homeowners and save taxpayers up to $1 billion, in <a href="http://www.huffingtonpost.com/2012/07/31/ed-demarco-principal-reduction_n_1724880.html" target="_hplink">a letter he wrote to Ed DeMarco. </a> He also wrote that DeMarco's resistance to principal reductions was not "the best decision for the country, because, as we have discussed many times, the use of targeted principal reduction by the GSEs would provide much needed help to a significant number of troubled homeowners, help repair the nation's housing market, and result in a net benefit to the taxpayer."

  • Rep. Elijah Cummings (D-MD)

    Rep. Elijah Cummings is less than thrilled by Ed DeMarco's decision not to provide principal reductions. Cummings wrote in <a href="http://www.huffingtonpost.com/2012/07/31/ed-demarco-principal-reduction_n_1724880.html" target="_hplink">an email</a>: <blockquote>"It is incomprehensible that Mr. DeMarco would reject the chance to save up to a billion dollars in taxpayer funds while helping nearly half a million homeowners stay in their homes," Cummings said. "He should immediately withdraw this reckless and misguided letter and start following the law Congress passed."</blockquote>

  • James Lockhart, Former Chairman Of The Federal Housing Finance Agency Chairman

    President George W. Bush's Chairman of the Federal Housing Finance Agency, James Lockhart (seated to the far right), has argued that the FHA ought to experiment with principal reductions, <a href="http://thehill.com/blogs/on-the-money/1091-housing/225101-cummings-housing-regulator-fhfa-wasting-taxpayer-money-by-refusing-principal-forgiveness" target="_hplink">the Hill reports.</a> "Foreclosure is not the answer. ... We're destroying neighborhoods with foreclosures."

  • Sen. Richard Durbin (D-IL), Senator Majority Whip

    Senate Majority Whip Richard Durbin (D-IL) told reporters that he believed DeMarco's decision was "short-sighted" and "an abdication of his responsibilities, " <a href="http://thehill.com/blogs/on-the-money/banking-financial-institutions/241343-fhfa-opts-against-principal-mortgage-reductions" target="_hplink">the Hill reports.</a> "The alternative to principal reduction is foreclosure -- a disastrous outcome for homeowners, taxpayers and the American economy. It is way past the time for leadership to stabilize our real estate market."

  • Shaun Donovan, Secretary of Housing and Urban Development

    Secretary of Housing and Urban Development, Shaun Donovan, has urged the use of principal reductions to prevent foreclosure, <a href="http://thehill.com/blogs/on-the-money/1091-housing/225101-cummings-housing-regulator-fhfa-wasting-taxpayer-money-by-refusing-principal-forgiveness" target="_hplink">the Hill reports.</a>

  • William Dudley, President Of The New York Federal Reserve

    William Dudley, president of the New York Federal Reserve, argued for the development of an earned principal reduction program for borrowers who are underwater but still making mortgage payments, <a href="http://www.newyorkfed.org/newsevents/speeches/2012/dud120106.html" target="_hplink">In a speech to the New Jersey Bankers Association. </a>

  • Christine Lagarde, International Monetary Fund Managing Director

    International Monetary Fund managing director, Christine Lagarde, argued that the U.S. should implement some form of mortgage relief, including principal reduction, in <a href="http://www.huffingtonpost.com/anna-cuevas/imf-lends-support-to-loan_b_1447133.html" target="_hplink">a speech she delivered at the Brookings Institute earlier this year.</a>

  • President Obama

    The Obama administration has long supported principal reductions, arguing that such write-downs would reduce delinquencies, help 11 million underwater borrowers and help get the housing market back on track, <a href="http://www.reuters.com/article/2012/05/10/us-usa-housing-donovan-idUSBRE8491DW20120510" target="_hplink">Reuters reports.</a> Under DeMarco's directorship, the FHFA blocked the White House's idea for home-energy improvement when it told firms not to participate, <a href="http://www.washingtonpost.com/politics/edward-j-demarco/gIQAK9StKP_topic.html" target="_hplink"><em>the Washington Post</em> reports.</a> President Obama attempted to replace DeMarco with North Carolina banking commissioner Joseph Smith in 2010, only to be rebuffed by Senate Republicans who refused to confirm Smith, leaving DeMarco in place.

  • Anti-Principal Reduction

  • Rep. Darrell Issa, House Government Reform And Oversight Committee Chairman

    House Government Reform and Oversight Committee Chairman, Rep. Darrell Issa (R-CA), wrote a letter to DeMarco urging the FHA director to "carefully evaluate relevant information prior to making a decision that could cost taxpayers billions if the government were to pay down the principal value of underwater mortgages for select homeowners," <a href="http://thehill.com/blogs/on-the-money/1091-housing/225383-house-republicans-urge-housing-regulator-to-remain-steadfast-on-principal-reductions" target="_hplink">The Hill reports.</a>

  • Rep. Spencer Bachus (R-AL), Chairman Of House Financial Services Committee

    Chairman of the House Financial Service Committee, Rep. Spencer Bachus (R-AL), told reporters that Ed DeMarco stood up for "the best interests of the American people" by rejecting principal reduction, <a href="http://www.nytimes.com/2012/08/01/business/us-agency-bars-fannie-and-freddie-from-reducing-principal.html" target="_hplink"><em>The New York Times</em> reports.</a>

  • Sen. Bob Corker (R-TN)

    Sen. Bob Corker (R-TN) <a href="http://www.corker.senate.gov/public/index.cfm?p=News&ContentRecord_id=f3d4c62d-0f70-42fc-b485-99d0bb6b05b4" target="_hplink">thanked Ed DeMarco</a> for "making his decision based on objective analysis and with the taxpayer in mind."

  • American Bankers Association

    ABA executive vice president on mortgage policy, Bob Davis, announced the association's support for Ed DeMarco's rejection of principal reduction, <a href="http://thehill.com/blogs/on-the-money/banking-financial-institutions/241343-fhfa-opts-against-principal-mortgage-reductions" target="_hplink">the Hill reports.</a> "As FHFA's research illustrates, principal reductions do not measurably help troubled borrowers avoid foreclosure, yet increase the cost to taxpayers at a time when our nation's fiscal situation is already strained."

  • Edward DeMarco, Federal Housing Finance Agency Acting Director

    Acting director of the Federal Housing Finance Agency, Ed DeMarco, announced to Congress that he would <a href="http://www.huffingtonpost.com/2012/07/31/ed-demarco-principal-reduction_n_1724880.html" target="_hplink">not permit mortgage giants Fannie and Freddie Mac to assist struggling homeowners by reducing their principal.</a> In a letter DeMarco sent to Congress, the acting director stated that he did not believe that there would be a substantial financial benefit to the taxpayer and that reducing principal would introduce "moral hazard" into the housing market. "This could give borrowers who are current on their mortgages a message that the government endorses forgiving a portion of mortgage debt if hardship can be demonstrated, creating a very broad incentive for underwater borrowers to seek ways to become eligible." Under DeMarco's directorship, the FHFA blocked the White House's idea for home-energy improvement when it told firms not to participate, <a href="http://www.washingtonpost.com/politics/edward-j-demarco/gIQAK9StKP_topic.html" target="_hplink"><em>The Washington Post</em> reports.</a> President Obama attempted to replace DeMarco with North Carolina banking commissioner Joseph Smith in 2010, only to be rebuffed by Senate Republicans who refused to confirm Smith, leaving DeMarco in place.<a href=" Under DeMarco's directorship, the FHFA blocked the White House's idea for home-energy improvement when it told firms not to participate, a href="http://www.washingtonpost.com/politics/edward-j-demarco/gIQAK9StKP_topic.html" target="_hplink"emThe Washington Post/em reports./a President Obama attempted to replace DeMarco with North Carolina banking commissioner Joseph Smith in 2010, only to be rebuffed by Senate Republicans who refused to confirm Smith, leaving DeMarco in place.a href="http://www.huffingtonpost.com/peter-s-goodman/ed-demarco-fannie-freddie-principal-reduction_b_1336190.html" target="_hplink"http://www.huffingtonpost.com/peter-s-goodman/ed-demarco-fannie-freddie-principal-reduction_b_1336190.html/a" target="_hplink"> leaving DeMarco in place.</a>