Editors' Note: This piece has been
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NEW YORK -- On Friday morning, the Judson Memorial Church in Washington Square Park replaced the customary Bible verse on its bulletin board with Rahm Emanuel's admonition to the new administration, "Never let a serious crisis go to waste. What I mean by that is it's an opportunity to do things you couldn't do before."
Just down the street at New York University Law School, Shaun Donovan, the newly confirmed secretary of the Department of Housing and Urban Development, displayed his own familiarity with the Book of Rahm, delivering a wide-ranging address to an audience of housing experts and officials at a conference on the future of housing policy. The new secretary outlined his plans for the department in the context of the recession and the end of the housing bubble -- and how he hopes to use that crisis to revitalize his moribund department.
"It's a little early," Donovan noted at the beginning of his remarks. "No speech writer, no assistant secretary, so it's a little bit of a risk for me to be doing this today."
Of immediate interest is HUD's role in addressing the mortgage crisis that underlies the current recession, particularly the problem of foreclosure. There were 2.3 million foreclosure filings in 2008, and HUD and its subsidiary, the Federal Housing Administration, are responsible for many federally insured mortgages. Donovan declined to roll out a comprehensive plan -- "I will not do the president the favor of scooping him on that" -- but he briefly outlined the combination of broad loan modification through the government and the private sector, as well legislation allowing bankruptcy judges to modify primary home loans, that was announced today.
Though his appointment has been widely applauded, some saw risk in putting the 42-year-old Donovan, who has a reputation as something of a technocrat, in the HUD seat. Could a relatively young secretary without political experience hold his own in Washington's turf battles? But in response to an audience question on interagency cooperation, Donovan emphasized that he was working alongside key members of the president's economic team, including Larry Summers, Tim Geithner, Austan Goolsbee, and Christina Romer.
Michael Kelly, the head of Washington, D.C.'s Housing Authority and the Council of Large Public Housing Authorities, a national coalition of housing agencies, was pleased that the HUD secretary -- "a professional who knows our business" -- is part of the White House policy conversation. "These relationships weren't there in the past," Kelly observed, noting that with access comes more resources. Under the Bush administration, HUD saw budget cuts and little attention to its critical initiatives.
Donovan also displayed the Obama team's integrated approach with remarks in support of job-creation measures included in the economic-stimulus legislation, passed that day. He testified to the economic-stimulus package's benefits to the housing market, both by keeping people employed and through increased funding for HUD equal to a third of the department's yearly budget. The department is committed to using stimulus funding to address the fallout of foreclosure. The final stimulus bill provides $2 billion in neighborhood-stabilization funding and $1.5 billion for an emergency-shelter grants program to help prevent homelessness.
But all of those prescriptions revolve around the crisis part of the equation: What about the opportunity for a new agenda under a Democratic administration? Housing policy has been stagnant for years, underfunded on the federal level and in need of new framing, especially linkages with transportation, energy, and education policy.
Donovan had sharp criticisms for HUD under the previous administration, observing that the department had "in no way" been a leader on sustainable-housing issues and calling their relationship with Congress "disturbing." Asked about working with state and local stakeholders, the new secretary observed, "The first thing we can do is do no harm. Already that would be an advance from the current state of where HUD is in terms of quote-unquote helping nonprofits and other developers." The department hasn't been known recently for its can-do spirit at the local level, but Donovan could have just as well been referring to the scandal that brought down his predecessor, Alphonso Jackson, who tried to force a local housing authority to hand over land to a politically connected private developer.
Donovan sees the current focus on housing as an opportunity to move federal policy beyond short-term measures. He is not waiting -- some of his new initiatives will be included in the 2010 budget, which will be released in the coming weeks. The Obama administration's housing-policy vision comes in five key areas.
First is remaking the mortgage system by returning mortgage lending to the private sector and centralizing the complex regulatory system surrounding home loans.
Second, Donovan promised to address what he calls "the persistent rental-housing crisis that far too many low-income Americans face." That starts by fulfilling Obama's campaign promise to create a National Housing Trust Fund to develop affordable mixed-income housing. This is the same type of program that Donovan led successfully while he was New York City's housing commissioner. The secretary also announced plans to attack rising family homelessness, in part by building off Bush administration success in pushing back against single homelessness with housing-first solutions.
Third, Donovan wants to use HUD as a force for broader sustainability, in line with the president's commitment to dealing with climate change. This element will be led by Ron Sims, the executive of King County in Washington state, who was nominated to be deputy secretary last week. The plan will involve partnering with the departments of Energy and Transportation, particularly on the issue of metropolitan development. Donovan noted that residential housing accounts for 28 percent of U.S. greenhouse gas emissions, and with HUD's ability to reach one in 10 homes in the country, he sees the capability to set standards in home-energy use that compares to the New Deal-era creation of the long-term home loan.
"Just as FHA catalyzed the 30-year mortgage generations ago, we can catalyze an enormous change in the way that housing gets built and renovated," the new secretary said.
Fourth, Donovan wants to make fair housing a larger priority at his department, condemning the practice of targeting risky sub-prime loans to minority homeowners, even those who could qualify for safer prime loans. He promised stricter enforcement of existing regulations in the first 100 days of the administration.
Finally, the new secretary promised to develop research tools that will provide useful metrics to evaluate HUD programs and develop new policy initiatives, a major concern for Donovan. "It's as if the development of HUD's programs stopped a generation ago," he said.
"Do housing investments lead to better education for children?" Donovan asked. "Do housing investments lead to broader success within communities? Do housing programs, well planned and executed, lead to better job outcomes for families that benefit from them? To be frank, I don't think we can answer those questions in a way we should be able to today. "
That kind of research has been long advocated by Conrad Egan, the head of the National Housing Conference, an advocacy group that until recently counted Donovan as a board member. After watching the speech, Egan sent an e-mail to his colleagues, asking, "How long has it been since 400+ people stood to applaud a HUD Secretary??"
"Shaun is definitely fulfilling our expectations," Egan said but notes that the administration needs to move quickly to fill jobs in the department, especially in the middle levels where policy execution takes place.
Donovan seems well aware of these challenges, joking at the start of the speech about his empty apartment in Washington (the secretary commutes home to New York on weekends). Donovan arrived at his capital pied-a-terre with a take-out dinner, only to discover he had no plates, cups, or silverware. The experience reminded him of transitioning into HUD, and he told the audience that he hoped the two-day policy conference would be an opportunity to stock the shelves of his department, so to speak, with a range of new ideas and tools.
"We do have an enormous opportunity. But it will not come again. If we waste it, we will have no one to blame but ourselves."
Correction: The nominee for deputy secretary is Ron Sims, not Ron King.
