When President Obama announced that he was naming Melvin L. Watt to run the Federal Housing Finance Agency (FHFA) and Julian Castro to become Secretary of Housing and Urban Development (HUD), I felt that both appointments were major mistakes. At this point in time, however, I think I may have been half wrong in my assessment of their abilities to handle these jobs.
At first, both Watt and Castro appeared severely out of their leagues. Watt was an undistinguished Congressman with a penchant for tilting to the left. There was genuine reason to believe that he would tow the Obama line when it came to government intervention in housing. And Castro was the mayor of San Antonio and one of the fastest rising Hispanic figures in the Democratic Party – indeed, some pundits are eyeballing him as a potential vice presidential candidate in 2016. Neither gentleman had any great experience in formulating housing policy, and it was easy to assume their appointments were strictly engineered for partisan purposes.
For his part, Watt appears to be something of a happy wild card. In an October 1 news article that ran on the Bloomberg wire, reporter Clea Benson noted that Watt has confounded those who were expecting quasi-socialist machinations from his FHFA office.
“Watt’s circumspect style and scant policy changes in his first nine months as director of the Federal Housing Finance Agency have drawn criticism from some of the same housing advocates who pushed President Barack Obama to appoint him,” Benson wrote. “The National Low Income Housing Coalition and other groups said they expected Watt, the most powerful housing official in America, to move quickly to help troubled borrowers and lower-income families shut out of the two-year housing recovery. Instead, he is maneuvering cautiously, asking for public feedback on many issues — and earning accolades from the mortgage industry.”
Benson also quoted Peter Dreier, a public policy professor at Occidental College in Los Angeles and a highly vocal advocating of enabling debt reductions for borrowers with Fannie Mae and Freddie Mac mortgages. “Mel Watt has been a huge disappointment,” Dreier complained. “No one I know in the housing community understands why he’s sitting on his hands.”
To his credit, Watt appears to making a serious effort to understand the complexity of his duties before he attempts to make any significant changes to federal housing policy. In view of my earlier assertions that he was the wrong man for the job, I humbly acknowledge that my consideration of him was incorrect.
On the other hand, Castro’s leadership at HUD appears to be placing much more focus on the “urban development” element of HUD rather than on the “housing” side of the equation. His first major speech on housing took place on September 16 before the Bipartisan Policy Center’s annual housing summit, but Castro used his time on the podium to place a surplus amount of attention on Internet-related considerations. For example, consider this upcoming quasi-clueless happening that his office is producing.
“HUD is planning an event with the White House we call a ‘codeathon,’” he stated. “We’re bringing together data experts and programmers to take our information about communities and develop new digital tools that empower others. One of our hopes is that lenders will use these tools to see the whole picture when working with potential homebuyers. Let’s say they can easily determine a family wants to buy in an area where transportation costs are low. Lenders may consider these savings as they make their decisions about the quality of the loan – and that can help get credit moving.”
Oh, that’s all it takes to “help get credit moving”? Uh huh. Later in the speech, Castro enthusiastically called for a federal crusade to improve Internet usage.
“Over the next two-and-a-half years, I’m going to place a special focus on expanding broadband access,” he said. “Access to knowledge and information is as vital to a thriving community as access to jobs, good schools and safe streets … President Obama has challenged the nation to connect 99% of American’s students to broadband and wireless in their schools and libraries by 2018. As HUD Secretary, I’d like to ensure that this access follows them home.”
While Castro’s speech offered vague acknowledgement of issues relating to affordable housing (or the lack thereof), his Internet mania clearly drove his address. Perhaps Castro should spend some time at FHFA headquarters, where Watt can offer him some guidance on the importance of not rushing into a new job in a silly-willy manner. Until I start hearing some serious talk from Castro about how HUD can add muscle to the housing market, I remain unconvinced that his HUD ascension was a good idea.
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