Harvard-educated architect to lead an agency dealing with the mortgage mess

by Philip Elliott | The Associated Press

Saturday December 13, 2008, 3:54 PM

CHICAGO — Promising a prominent role for his housing department, President-elect Barack Obama on Saturday named a Harvard-educated architect to lead an agency dealing with the mortgage mess that dragged the country into a recession.

Former Clinton aide: New York Housing Preservation and Development Commissioner Shaun Donovan has a national reputation for developing affordable housing.With one in 10 U.S. homeowners delinquent on mortgage payments or in foreclosure, Obama said New York City housing commissioner Shaun Donovan will bring “fresh thinking, unencumbered by old ideology and outdated ideas” at the Housing and Urban Development Department to help resolve the housing and economic crisis.

“We can’t keep throwing money at the problem, hoping for a different result,” Obama said during his weekly address on radio and YouTube. “We need to approach the old challenge of affordable housing with new energy, new ideas, and a new, efficient style of leadership. We need to understand that the old ways of looking at our cities just won’t do.”

Donovan, head of the New York’s Housing Preservation and Development Department, is former Clinton administration HUD official with a national reputation for curtailing low-income foreclosures, developing affordable housing and managing the nation’s largest housing plan.

If confirmed by the Senate, Donovan would become the nation’s top housing official in the midst of the worst recession in decades. Falling home values and stricter lending standards have ensnared millions of U.S. households. More than 259,000 homes received a foreclosure-related notice in November, up 28 percent from a year earlier. The Federal Reserve is predicting that new foreclosures this year will reach 2.25 million, more than double pre-crisis levels.

Conrad Egan, president of the nonpartisan National Housing Conference, said Obama’s selection of Donovan signals that he recognizes HUD can play a big role in the economic recovery.

“It really needs to be a seat at the Cabinet table that is the principle point where housing and community development issues are brought together and resolved successfully,” Egan said. “HUD has been perceived as a second-tier participant in meeting that challenge.”

Congressional Democrats, with support from Obama, have sought to use part of the $700 billion banking bailout to help homeowners facing foreclosure. The Bush administration has resisted those efforts.

Obama has been reluctant to dive into the details of the plans. Since winning the presidency, he has asked his advisers to develop a plan that would save or create some 2.5 million jobs in the next two years and include the largest public works program in a half century. He said Saturday he sees HUD playing an important role

“This plan will only work with a comprehensive, coordinated federal effort to make it a reality. We need every part of our government working together,” Obama said, adding that “few will be more essential to this effort” than HUD.

Donovan, a 42-year-old New York native, told the Senate Banking, Housing and Urban Affairs Committee in May that HUD’s programs have led to “a feast-famine cycle, in which our program grows to the allowed size and then contracts so we don’t go above our authorized level.”

Obama said Donovan “understands that we need to move past the stale arguments that say low-income Americans shouldn’t even try to own a home or that our mortgage crisis is due solely to a few greedy lenders. He knows that we can put the dream of owning a home within reach for more families, so long as we’re making loans in the right way, and so long as those who buy a home are prepared for the responsibilities of homeownership.” said.

As New York Mayor Michael Bloomberg’s top aide for housing, Donovan kept foreclosures to a minimum in the city’s low- and moderate-income home ownership plan, with just five of 17,000 participating homes falling. He oversaw the creation of the $200 million New York Acquisition Fund, a collaboration involving the city, foundations and financial institutions. It is intended to help small developers and nonprofit groups compete for land in the private market.

Obama’s selection of Donovan marks the 11th post he has filled in his Cabinet, in just over a month since his election as the nation’s first African American president. Still to come are the Central Intelligence Agency, the Environmental Protection Agency, and the departments of energy, education, interior, labor, transportation and agriculture.

The rollout of the selection — announced at 6 a.m. Saturday via e-mail and later in Obama’s Saturday radio address — also was a surprise. Obama had introduced all previous Cabinet appointments at televised news conferences, where he also took questions from reporters.

Most speculation had centered on Miami Mayor Manny Diaz, Atlanta Mayor Shirley Franklin or Bronx borough President Adolfo Carrion Jr.

HUD often has been led by someone who is a minority; Donovan is white. Latino groups were pushing heavily for Diaz, following in the footsteps of Clinton appointee Henry Cisneros of San Antonio. Bush picked Mel Martinez of Florida, a Hispanic, and Alphonso Jackson of Texas, an African-American.

This HUD appointment bodes well for housing, and addressing the Mortgage Meltdown.


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