The problem isn’t Ed DeMarco

Neil Barofsky on why Ed DeMarco won’t be fired — and why he’s not the real problem with the Obama administration’s housing policy, or the economic fallout. Tim Geithner is, and ultimately, President Obama, who stands behind him:

Now, three years later, with a tightening presidential election and a Democratic base disillusioned by the government’s abandonment of its promise to help homeowners (less than 8 percent of the funds originally allocated in TARP for foreclosure relief has actually been spent), Geithner and the administration would like to present themselves as having undergone a conversion.

Let’s be very clear about what is going on here. This is not a conversion – it is a political convenience. Geithner may well be correct when he wrote in a letter to DeMarco that an effective principal reduction program would “help repair the nation’s housing market” and that the refusal to do so is not “in the best interest of the nation,” but it is his own policies that are primarily to blame for where we are today.

As we enter the final phase of the election campaign, we need to end the meaningless political posturing and recognize that as a country we have severely mishandled the housing crisis. It may be a fair debate whether we should have gone with the “all in” approach that I and others have advocated or the “do nothing and let the market find its natural bottom” approach advocated by many conservatives. There should, though, be little question that the chosen policy – a “foam the runway” approach that assisted the banks and only a fraction of the homeowners that could have benefited – has been a failure and has left us stuck in economic mediocrity. Geithner wrote this week to Demarco: “You have the power to help more struggling homeowners and help heal the remaining damage from the housing crisis.” If only he had heeded his own advice.

That’s right. Let’s call this what it is: a distraction. The administration has given nothing but lip service to the consumer side of the housing crisis, and in doing so, deepened and extended the economic crisis. They picked a side, and it was the bankers, not us. This wasn’t something the Republicans made them do: President Obama and Tim Geithner had the power to fix this. They still do.

I’ve written about Guy Saperstein before. Guy is a retired civil rights attorney who was listed as one of the Top 100 Lawyers In America, a major Democratic donor, part-owner of the Oakland A’s and a past president of the Sierra Club Foundation, and originally an enthusiastic Obama supporter. He says it’s time to squeeze Obama – not just over Ed DeMarco, but over the same housing policies Tim Geithner and President Obama have designed. The listserv email he sent is too long, so I’ll pick the most pertinent parts:

While it is comforting to believe the Obama Administration wants to do the right thing, there is too much evidence to the contrary. If the progressive community is serious about protecting home ownership as a core component of the American Dream, it needs to change tactics and raise the ante. And there is no better time to do so than in the middle of an election campaign. In fact, it is likely that if we don’t do it now, when the election is over we will have no leverage at all.

He then goes into the background of various “roads not taken” by the administration, and how they worked to undermine any progressive remedies. Oh dear, moral hazard!

This all would be bad enough, but it gets worse: The Obama Administration is still protecting banks, servicers and investors—at great cost to homeowners and home ownership. While more and more homes go into foreclosure, banks are not putting them back on the market, but are bundling and selling them to hedge funds, which are converting them to rentals. Banks and loan-servicers are subverting home ownership, while profiting from rentals, excessive late fees and foreclosure fees, while the federal government does nothing to stop the profiteering or provide serious protection for homeownership.

In this context, presented with an administration which has repeatedly supported banks, servicers and investors over homeowners, I think it would be a serious mistake to think that more internet pleas or another op-ed by Paul Krugman is going to reverse the tide. What is required, instead, is to treat this just like any political issue where the opposition is formidable and has the political infrastructure—including the President—under its thumb: You look for the points of vulnerability, you marshall your forces and you attack at those points of vulnerability.

He points out that DeMarco can’t be fired, because he’s a civil service employee. But he’s just an acting director, which means all Obama has to do is appoint his replacement during the Congressional recess.

So, how should housing advocates raise DeMarco’s profile? By taking a page out of Bill McKibben’s handbook and applying 5-days a week pressure on him, which would include pickets every day at FHFA offices, efforts to meet with him in his office, civil disobedience at or in his office for people willing to get arrested, shadowing and picketing him wherever he shows his face and handing out leaflets and information packets at all locations of direct action, as well as having housing advocates, and maybe other allies, make statements to the media whenever possible at all actions. Make Ed DeMarco toxic. Occupy Ed DeMarco!

Rebuild the Dream is going after him. If you want to help, click here.

Saperstein says Obama has only given lip-service to mortgage issues, but “no meaningful solutions, even solutions available to him with his executive powers.” He believes Obama and Geithner are using DeMarco as a campaign prop, and says it’s time to “take the prop away.” He suggests using the same tactics used by 350.org to stop the Keystone Pipeline – surround the White House, picket Obama events, embarrass the politicians.

Now, some of you will argue that we should not be embarrassing Obama; we need to re-elect him. To that I would respond that it is not our job to re-elect Obama, or anyone; our mission is to defend and promote the American Dream, of which home ownership is a fundamental component. Over the long run, if we are true to that mission, we will have far more impact on politics and policy than getting in bed with every politician who is marginally better than his opponent, but even in the short-run we can do more good by serious and tough action on foreclosure issues than protecting a weak President. And the reason I say that is that Obama already is in trouble on this issue.

[…] By being tough, serious and resolute on this issue, by not letting Obama, or anyone, get a free pass while millions of homeowners face financial ruin, by in fact having a real impact on this issue and preventing foreclosures, we can make Obama a better candidate, a more popular candidate, someone who people will see as a reason to get off their butts for and vote. It would be good for Obama politically to replace DeMarco; it would be good for Obama politically to be seen as doing something about the housing crisis. In short, there is nothing inconsistent with political activists being tough and demanding on political candidates and winning elections. If you doubt that, take another look at the 2010 election and the Tea Party.

The challenge for progressives isn’t to be right—that is the easy part. The challenge is to be effective. Up to now, we have been right on the foreclosure issue, but we and the housing groups haven’t been very effective. That is not a criticism, it is just a fact. But it means is that it is time to try new strategies.