Zandi cited as possible head of FHFA

April 15, 2013 at 4:51 PM   |   0 comments

WASHINGTON, April 15 (UPI) -- The White House has been testing the reaction in Washington to economist Mark Zandi running the Federal Housing Finance Agency, a policy analyst said.

Guggenheim Partners senior analyst Jaret Seiberg told the Los Angeles Times that said the White House has been floating Zandi's name around, trying to gauge the reaction to appointing the former economics adviser to U.S. Sen. John McCain, R-Ariz., as a replacement for Edward DeMarco.

DeMarco has angered Democrats and won praise from Republicans, because he hasn't permitted the Federal Home Loan Mortgage Corp., known as Freddie Mac, and the Federal National Mortgage Association, known as Fannie Mae, to negotiate reduced principals on mortgages to help struggling homeowners, the Times said.

Nine state attorneys general, including California's Kamala Harris, wrote to President Barack Obama in March urging him to replace DeMarco.

DeMarco has been acting director of the FHFA since 2009, taking over after James Lockhart, who was appointed during the George W. Bush administration, left the agency.

When the federal government seized control of Fannie Mae and Freddie Mac, it put the FHFA in charge of the mortgage brokers.

The two government-sponsored enterprises are 80 percent owned by taxpayers, as the government has put $187.5 billion into the companies to keep them afloat.

Both agencies were profitable in 2012 after six years in the red. The Congressional Budget Office predicts the investment, which has returned $65 billion to the government in the form of dividends, will turn a $51 billion profit for taxpayers by 2023.

U.S. Rep. Mel Watt, D-N.C., is considered a possible candidate to replace DeMarco, but there is concern that he wouldn't be given a warm reception by Republicans.

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