CHICAGO – In naming his choice for housing secretary, President-elect Barack Obama on Saturday rounded out his economic team and gave new prominence to the mortgage crisis that has dragged the country into a recession.
The selection of Shaun Donovan as secretary of Housing and Urban Development puts the current New York City housing commissioner at the forefront of one of the more nettlesome economic challenges confronting the new administration – the soaring foreclosures that are threatening homeownership nationwide.
The Federal Reserve estimates that lenders are on track to initiate 2.25 million foreclosures this year, more than doubling the annual pace before the crisis set in. What’s more, falling housing values and a plunging stock market have contributed to $2.8 trillion in lost household wealth in the third quarter.
Donovan joins a team led by Tim Geithner, Obama’s nominee for Treasury secretary, and Larry Summers, who will lead Obama’s National Economic Council. The team is working on an ambitious economic recovery plan that includes saving or creating 2.5 million jobs over the next two years.
Stemming foreclosures and stabilizing the battered housing market will be daunting tasks that have already bedeviled Congress and the Bush administration. “We need to approach the old challenge of affordable housing with new energy, new ideas, and a new, efficient style of leadership,” Obama said upon naming Donovan during his Saturday radio address. “We need to understand that the old ways of looking at our cities just won’t do.”
With one in 10 U.S. homeowners delinquent on mortgage payments or in foreclosure, Obama said Donovan will bring “fresh thinking, unencumbered by old ideology and outdated ideas” at the Housing and Urban Development Department to help resolve the housing and economic crisis.
Donovan, head of New York’s Housing Preservation and Development Department, is a former Clinton administration HUD official with a reputation for curtailing low-income foreclosures, developing affordable housing and managing the nation’s largest housing plan.