This week, a little known federal bureaucrat basically gave President Obama the middle finger. However, this little known bureaucrat, Federal Housing Finance Agency Acting Director Ed DeMarco, is the biggest obstacle standing in the way of our housing and economic recovery.
Unfortunately the response of the Obama administration only highlights how it's little talk, and no real action when it comes to fixing the housing crisis. On July 31, DeMarco told Congress and the Obama administration that he would not allow Fannie Mae and Freddie Mac, which hold almost half the mortgages in the country, to engage in targeted principal reduction for homeowners. DeMarco, a holdover from the Bush administration and the accidental head of FHFA, has ideologically and obstinately opposed principal reduction over and over again.
This is after it's been proven - and then buried and lied about within his own agency - that this program could immediately benefit more than 500,000 homeowners AND save taxpayers over $1 billion.
The Obama administration's response was a letter from Treasury Secretary Geithner declaring, "...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 taxpayers."
While this strongly worded response is to be commended, it's a sad truth that the administration's public voice is not actually aligned with its real one. This voice, the one that has the pull and authority to get the work done--is silent. And the timing couldn't be worse.
Just over four years ago, Wall Street and big banks crashed the economy, causing home values to tank. Now over 15 million homeowners are underwater--drowning in debt to banks they shouldn't owe. This means that the money they have worked hard and saved for to buy their home to invest in their future, support their retirement, their kids' college funds, and any safety net is gone.
And this is the crux of a major election issue. The Washington Post and National Public Radio have already started to report that Presidential candidates need to address housing in swing states such as Nevada. Because with more than 15 million underwater homeowners, that's potentially more than 15 million voters who are watching how President Obama and Governor Romney will address this issue.
But that's just the tip of the iceberg. It's not just the millions of homeowners impacted--it's all of us. It's our neighborhoods that are destroyed by foreclosed homes. It's our communities that are deprived of hundreds of millions of dollars in revenue because too many homeowners have to unfairly pay the big banks instead of investing in local businesses.
So when DeMarco said no to principal reduction this week (again) and President Obama still didn't fire him, that sends the wrong message to all of us impacted by Wall Street's systematic fraud at the exactly wrong time.
President Obama--you have a short window to turn this around. Don't get lost in the mire of having to go back and forth with DeMarco. Fire or demote DeMarco - remove this block and nominate someone who will fight for principal reduction. Shake the trees loose at the Department of Justice, who has been reportedly holding back critical staffing resources into the federal task to investigate Wall Street Fraud force you announced during the State of the Union.
Do these two concrete actions and start publicly addressing how to hold Wall Street accountable (everyone but Wall Street loves that!) and really, truly, boldly, support millions of homeowners and everyday people whose lives have been systematically ruined by the big banks.
Over the next few months, you and Governor Romney will be competing for the votes of millions of people. The candidate that fails to seriously address Wall Street accountability, the housing crisis and our economy, will be the candidate that loses.