Alphonso Jackson, the Secretary of Housing and Urban Development, has resigned amid the worst housing crisis since the Great Depression—a move that average Americans might hope signals that someone in the Bush administration is finally taking personal responsibility for the failed policies that led to the current U.S. housing crisis. After all, even the departures of chief executives at some of America’s largest investment banks last year stemmed from the mortgage meltdown that happened on their watch.
Yet not surprisingly for the Bush administration, Secretary Jackson appears to be leaving under a cloud rather than as a principled act of public-servant accountability. Even more sadly, there is little reason to believe that this resignation will open the way forward to an agenda dealing with the immediate needs of millions of homeowners facing foreclosure, and hundreds of communities drowning in foreclosed, vacant, and abandoned homes.
Under virtually every responsible proposal to address the housing crisis, the Federal Housing Administration within HUD will play a central role. The FHA can provide federally insured home loans in amounts and on terms that working families can afford without fear of ticking time bomb interest rate spikes and other predatory practices. With perhaps as many as 2 million more home loans in default heading to foreclosure this year, we cannot afford to have our nation’s lead housing agency adrift until next January.
HUD still has many long-term public servants in senior positions capable of addressing the needs of American homeowners. Yet within the FHA there are critical vacancies that need to be filled. What’s more, lack of direction and support from the top has been the norm over the past eight years.
Indeed, over the course of his presidency, Bush talked up homeownership, yet HUD and the FHA ceded the home loan territory for low- and moderate-income working Americans to unregulated mortgage companies. What some commentators have called "unbridled markets” were aided and abetted by deliberate under-regulation during the Bush years.
Top administration officials, alongside conservatives in Congress, continue to try to shift blame away from their ideology-driven policies and onto anyone they can label a "speculator" now that this man-made mortgage meltdown has resulted in devastating economic consequences. Never mind that millions of homeowners were trying to get away from excessive rent payments due to the nation’s chronic shortage of decent affordable rental housing.
There will be time later to sort out the legacy of Secretary Jackson. His resignation, however, immediately focuses even greater pressure on Treasury Secretary Henry Paulson, Federal Reserve Board Chairman Ben Bernanke, and President Bush to stop intoning the magic of the marketplace working itself out, and to start using the levers of government to get housing and home loan markets back to normal functioning as quickly as possible.
The Bush administration has signaled that it may well turn to FHA to help troubled homeowners—months after Congress decided this was the way to go and only weeks after Sen. Christopher Dodd (D-CT) and Rep. Barney Frank (D-MA) introduced legislation along these lines. For the FHA to play the role that is envisioned, however, it will need regulatory flexibility and, of course, leadership—and soon.