Obama Eyeing New Leader for Federal Housing Finance Agency

Facing increased scrutiny from housing advocates and community groups, President Barack Obama is being asked once again to sidestep political protocol to replace Ed DeMarco, the acting head of the Federal Housing Finance Agency (FHFA).

Obama is being asked to make a “recess appointment” for a new head of the FHFA, the government agency that oversees home-loan giants Freddie Mac and Fannie Mae. Such an appointment, done by a president when the U.S. Senate is in recess, can be a risky move in such a tumultuous political climate.

DeMarco Controversy

In early 2012, Democrats urged Obama, to no avail, to replace DeMarco using a recess appointment. DeMarco has been long chastised for what some see as a harsh stance on changes to the way the government handles underwater home loans. DeMarco has refused to allow Fannie Mae and Freddie Mac, which hold most of the mortgages in the country, to participate in a key program that allows principal reduction. DeMarco has called principal reduction a moral hazard that would incentivize delinquency.

While the president does have the power to make recess appointments, it can put future political favors in jeopardy and draw a deeper chasm in an already sharply divided Congress. And in the end, the new appointment may not stick because the Senate must eventually approve the new selection.

This second call for a recess appointment puts the president in more political turmoil. In January, when he made four top recess appointments, GOP leaders cried foul. The U.S. Court of Appeals for D.C. is currently hearing arguments that Obama violated the Constitution and abused his power.

Other Cabinet Vacancies

At the same time, Obama is trying to garner favor as he shortlists nominees for secretaries of State and Defense and the new head of the Central Intelligence Agency (CIA).

By Dec. 31, Obama is expected to name former Republican Sen. Chuck Hagel, of Nebraska, as the next Defense secretary. Other nominees include former senior Pentagon official Michele Flournoy and Democratic Sen. John Kerry, who currently sits as the chairman of the Senate Foreign Relations Committee.

In replacing Hillary Clinton, who will step down from her secretary of State post, insiders had indicated that U.S. Ambassador to the United Nations Susan Rice was a top candidate. But it’s unlikely that she’ll make it past Senate Republicans, upset by her statements following the U.S. Consulate attack in Benghazi, Libya, in September. Kerry has also expressed interest in the job and is considered a favorite.

Obama will also likely announce his pick to head up the CIA after Director David Patraeus, a retired four-star general, quit after admitting an extramarital affair. No names have emerged as a replacement, however insiders indicate that acting director Mike Morell is a front-runner.