If enough of us demand it, we can get the White House to answer a simple question: Will you or will you not stand with underwater homeowners and push for principal reductions—even if it means pushing aside the agency chief who is opposing that remedy?
We’re asking our supporters to join with Rebuild the Dream and sign this White House petition now calling for “Fannie Mae and Freddie Mac to issue principal reductions for underwater homeowners.” If 25,000 people sign the petition by Sunday, the administration has promised to respond. As of 3 p.m. today, the petition was less than 4,000 short of the signatures it needed.
This petition follows on the heels of our own petition to President Obama that he should fire Edward DeMarco—the head of the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac—if DeMarco continues to oppose principal write-downs for underwater homeowners.
A recent report by the staff of the Federal Housing Finance Agency has concluded that if mortgage financiers Fannie Mae and Freddie Mac would allow underwater mortgages to be written down to their true value, not only would millions of homeowners would benefit but taxpayers would save money in the long run. And that, in turn, would stimulate the economy: The spending that would be unleashed once the debt bubble around these homeowners is burst could support the creation of a million new jobs, according to The New Bottom Line.
Earlier this week Edward Luce wrote in the Financial Times that DeMarco’s resistance, and Obama’s seeming impotence in the face of that resistance, were standing in the way of a robust housing recovery. And without a robust housing recovery, a general economic recovery with the kind of job growth we need would be unlikely.
“Rarely in the annals of American administrations has one president encountered so much stubbornness from one regulator,” Luce wrote. “So far Mr DeMarco has resisted White House blandishments to allow large write-downs of the principal mortgages of delinquent borrowers. Indeed, he has been blocking efforts to provide more help for distressed homeowners since Mr. Obama took office. He has played the immovable object; Mr. Obama, the resistible force.”
Luce’s column ends with the kind of common sense that should be at the core of how our regulators should respond to the housing crisis. “Every American is damaged by the bad housing market because it holds down the rate of economic recovery,” he wrote. “Reviving it has nothing to do with morality. It is about raw, capitalist self-interest. It is therefore also about protecting the taxpayer. What a pity Mr. Obama is still reluctant to enforce his own arguments.”
But perhaps that can change if thousands of people demand that the White House respond to the question: Will you allow Edward DeMarco, a Bush administration holdover, to keep the economy in the ditch that Bush administration policies dug, or will you move the obstructions aside to provide relief to underwater homeowners and a boost to the economy?
Let’s see if we can get an answer.