In yesterday’s New York Times Gretchen Morgenson examines the plight of Ed DeMarco who is the acting director of the Federal Housing Finance Committee. He has suffered the slings and arrows of many in Washington because he hasn’t forced Fannie and Freddie to write down principal for underwater homeowners. He says he has an obligation to the taxpayer not to do so. Barney Frank disagrees. (Others do too.)
The author makes the argument that such write downs actually constitute yet another bailout for the banks.
(From the New York Times)
“But in recent weeks, Mr. DeMarco has come under increasing pressure to chuck his obligation to taxpayers and make Fannie and Freddie write down principal on mortgages held by troubled borrowers. He says, with reason, that such a program would run counter to his legal obligation to pursue only those activities that pose the least cost to taxpayers.
Representative Barney Frank, the Massachusetts Democrat who supported Fannie Mae almost to its collapse, has called for Mr. DeMarco’s resignation because he is “too rigid” on the issue. Representative Elijah E. Cummings, a Maryland Democrat and ranking member of the House Committee on Oversight and Government Reform, told a field hearing in Brooklyn last week that Mr. DeMarco “may be the biggest hurdle standing between our nation and the recovery of our housing market.”