Obama Names New HUD Secretary

President-elect Obama used his Saturday radio address to announce his choice to head HUD and offered some thoughts on the housing crisis. Both his choice and his remarks are disappointing.

The new head of HUD will be Shaun Donovan, currently the commissioner of the New York City Department of Housing Preservation and Development. Prior to that he was a HUD official in the Clinton administration and worked for Prudential Mortgage Capital managing FHA lending and affordable housing investments. I find that to be a pretty thin resume.

Mr. Donovan would appear to be long on government experience and woefully short on nuts and bolts housing finance experience. Arguably one of the bigger jobs that will face this administration is the reconstruction of the housing finance infrastructure of the country. To do that job it would have helped to have someone that had been through the wars. Mr. Donovan is 42 years old and appears to have spent the last 12 years at least in various bureaucracies. There’s a lot of expertise out there that should have brought to bare on this problem.

I had over the last few weeks felt that Obama was, at least, tentatively trying to send a message to the people that there was a tough road ahead and that things were going to change. Today he went backwards and sounded like just another pol.

“To end this economic crisis, we must end the mortgage crisis where it began. This all started when Americans took out mortgages they couldn’t afford,”

Sigh. It’s manifestly clear to just about everyone with an IQ above 80, and I’m sure to Obama as well, that the problems transcend the mortgage crisis. In retrospect, it was just the canary in the coal mine. No doubt it needs to be turned around, probably by letting it run its course with some targeted government assistance to take off the too rough edges. But “ending” it, even if that were doable, is not going to solve the larger problems.

As if that weren’t enough, he then gave us some of the same tired rhetoric about the dream of home ownership:

“He knows that we can put the dream of owning a home within reach for more families, so long as we’re making loans in the right way, and so long as those who buy a home are prepared for the responsibilities of homeownership,”

We got into this mess by over promising housing to the country and then throwing good sense overboard in an attempt to deliver on the promise. To again throw out that promise even if it is qualified by an indication that loans will be done properly is the wrong message.

Mr. Obama had shown some signs of being willing to shoot straight with the American people and even give them some tough love. Today’s remarks and appointment are a disappointment.


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