BLOG VIEW: The Next HUD Secretary

Written by Phil Hall
on December 01, 2008 No Comments
Categories : Blog View

Last week, when President-elect Barack Obama introduced the leaders of his new economic team, one significant position remained unfilled: the next secretary of the Department of Housing and Urban Development (HUD).

Does the HUD secretary deserve to hold the same level of policy-formulating importance as the Treasury secretary, the director of the National Economic Council, the chairman of the Council of Economic Advisers and the director of the Domestic Policy Council? I would think so. Considering the roots of the current crisis are in the housing market, and given the new sense of importance carried by HUD and two of its agencies – Ginnie Mae and the Federal Housing Administration – it would seem the naming of a HUD chief should be given a high priority.

Perhaps it might be appropriate if the new Obama administration took the time to take a new look at HUD, which seems to have lost a lot of its Washington appeal and influence in the past two decades.

HUD was seen for a long time as an A-list department. President Lyndon B. Johnson used the department to break a historic barrier in 1966 when Robert C. Weaver became both the first HUD secretary and the first African American cabinet secretary. The HUD role has attracted many prominent political figures – George Romney, Patricia Roberts Harris, Moon Landrieu and Jack Kemp were at the HUD steering wheel during the department's history.

But during the 1980s, HUD's prestige in the executive branch began to wane. Ronald Reagan reportedly didn't even recognize Samuel Pierce, his HUD secretary, during a Washington function, mistaking him for a municipal mayor. (Whether that is a statement on Pierce's ineffectiveness or Reagan's absentminded leadership can be debated.) Kemp was the HUD chief during the first Bush White House, but clashed repeatedly because he was not seen as an equal planning partner by that administration's higher powers. Henry Cisneros and Alphonso Jackson were forced out of their HUD positions due to scandal, while Andrew Cuomo and Mel Martinez seemed to have used their HUD tenures primarily as a springboard for their higher political goals and not as a platform to improve the state of housing and urban development.

In this decade, HUD's value diminished significantly until this year. Both Ginnie Mae and FHA became borderline irrelevant during the go-go years of the housing bubble, while the department's response to the housing crisis created by Hurricane Katrina's devastation to New Orleans was a national embarrassment. And as the current economic crisis metastasized and a solution needed to be created, HUD Secretary Steve Preston was not an equal planning partner with Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke in regard to creating solutions. Preston has also been conspicuously quiet as Paulson continues to tinker with the $700 billion bailout/rescue program.

As the country faces a housing crisis of proportions that have not been experienced since the Great Depression, and as the mortgage banking industry continues to evolve in ways that few people anticipated, there is a strong need for a take-charge, innovative HUD leader who can help steer the nation out of the current housing crisis. Of course, it will help if this leader stays focused on the job and does not get involved in scandals or work with one eye on a high-profile political opportunity.

The Obama administration will be a make-or-break situation for HUD – either it will be used to create a serious strategy to address the nation's housing needs, or it will just sink into lower-level status while other cabinet positions take priority in determining housing-related economic policy. I have no idea which way the situation will turn, but I am hoping for a reinvigorated HUD – we gain nothing by having it as a weak, second-tier department.

– Phil Hall, editor, Secondary Marketing Executive.

(Please address all comments regarding this opinion column to hallp@sme-online.com.)

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