By Cliff Montgomery – Feb. 18th, 2009
For too long, the Department of Housing and Urban Development (HUD) has been little more than a second-tier federal agency. But America’s current economic meltdown, made particularly harsh thanks to a recordnumber of foreclosures, has made HUD an essential player in Obama’s economic recovery plan.
“HUD’s role has never been more important,” proclaimed President Obama during a radio address on Dec.13th. During the broadcast, Obama made a point of announcing his nominee for HUD secretary, ShaunDonovan.
“As Commissioner of Housing Preservation and Development in New York City, Shaun has led the effort tocreate the largest housing plan in the nation, helping hundreds of thousands of our citizens buy or rent theirhomes,” said Obama during the December broadcast.
“Prior to joining Mayor Bloomberg’s Administration, Shaun worked both in business, where he was responsiblefor affordable housing investments, and at one of our nation’s top universities, where he researched and wroteabout housing issues,” Obama continued.
“This appointment represents something of a homecoming for Shaun, who worked at HUD in the ClintonAdministration, leading an effort to help make housing affordable for nearly two million Americans. Trained asan architect, Shaun understands housing down to how homes are designed, built, and wired,” added Obama.
Donovan was sworn in as HUD secretary on January 26th, 2009. He has quite a bit of work to do.
The department’s mission of providing fair, safe and affordable housing now necessarily is a key part of theObama Administration’s recovery plan, which is the largest and most ambitious stimulus package since theGreat Depression.
“How housing is handled is going to be crucial to any hopes of an economic recovery,” Jerry Howard, president-CEO of the National Association of Builders, was quoted as saying in a National Journal articlepublished last week.
That may be a tough job for an agency historically regarded as the epitome of an unresponsive, dysfunctionalbureaucracy. The previous HUD Secretary, Alphonso Jackson, resigned in April 2008 after facing damningallegations of wrongdoing on federal contracts. In fact, HUD’s very process of annually allocating millions tostates and local areas has long been a farm for fraud, waste and abuse.
If Obama’s economic plan is to work, America’s new HUD chief will have to snap the department into shape–fast.
The agency’s greatest duty under the Obama plan will be to ensure that its Federal Housing Administration(FHA) will stop the deluge of rotten mortgage loans.
The Federal Housing Administration insures single-family and multi-family home mortgages–a clearly essentialservice after the collapse of America’s sub-prime lending market. The FHA also will again have to become amajor refuge for those needing affordable housing loans.
But the department cannot hope to divert resources for FHA from related programs aiding communitydevelopment, public housing and other essentials.
“You’ve got to do both — the old and the new,” Nicolas Retsinas, a Clinton Administration FHA commissioner,said to National Journal.
HUD also will have to vastly improve its information-technology systems.
“Technology modernization is something that needs to hit the forefront,” Rep. Shelley Capito (R-WV), rankingmember of the House Financial Services Subcommittee on Housing and Community Opportunity, told NationalJournal.
“With some [HUD] programs, you are still waiting for the paperwork to come in,” added Rep. Capito.
Those are great tasks for any HUD secretary. But if his record really is as stellar as Obama claims, thenDonovan may be the right person to head an agency that’s now crucial to this nation’s economy.
