Policy, The Making Of


Days before President Obama unveiled his $275 billion fix for America’s foreclosure crisis, Shaun Donovan, the new Secretary of Housing and Urban Development (HUD), ticked off the grim statistics: 2.3 million foreclosures last year; entire metropolitan areas—Stockton, Las Vegas—with ten percent of their housing stock foreclosed; distressed sales accounting for 45 percent of all homes sold in December.

And yet as Donovan delivered a sneak preview of the administration’s housing agenda at a New York University conference on February 13, he cheerfully admitted that the herculean task before him—restoring the federal government’s tattered credibility on housing issues—remains something of a work in progress. “It’s early for me to be out speaking,” Donovan said with a laugh. “No speech writer, no secretaries—it’s a little bit of a risk.”

Departing from the script was precisely the point at the two-day conference, called A Crisis Is a Terrible Thing to Waste: Transforming America’s Housing Policy and packed with policy heavyweights like former HUD secretary Henry Cisneros and Rockefeller Foundation president Judith Rodin. While acknowledging the gravity of the crisis, Donovan laid out broadly ambitious goals that should please longtime HUD critics and advance Obama’s campaign pledge of a tightly orchestrated urban policy.

Most importantly, Donovan has landed a seat at the table with top advisors Lawrence Summers, Timothy Geithner, and Christina Romer as they’ve grappled with the nation’s economic collapse. The recovery bill, Donovan said, contains $13.6 billion that will flow through HUD—equivalent to nearly one-third of the agency’s annual budget—to renovate public housing and rehabilitate foreclosed properties, among other initiatives. He also said that investments would bolster the National Housing Trust Fund and tackle housing discrimination, something with which Donovan gained experience as New York’s housing commissioner. (In Jamaica, Queens, 60 percent of all 2007 mortgages were subprime loans, he said, though many applicants had credit scores that should have qualified them for prime mortgages, suggesting that lenders targeted minorities.)

But perhaps Donovan’s most far-reaching plans would transform HUD into a force for sustainability. “Just as the FHA catalyzed the 30-year mortgage generations ago, we can catalyze an enormous change in the way that housing is built and renovated,” he said, noting that insurance programs or loan guarantees could underwrite solar installations or energy-saving retrofits. More ambitiously, he said, “HUD must be the leader within the administration on thinking about the locational choices that our cities and our metropolitan and rural areas are making, and the impacts they have on climate change.” To that end, Donovan is launching a HUD office of sustainability to be headed by deputy secretary Ron Sims, the Seattle-based county executive who has pioneered the use of coordinated housing, zoning, and transportation policies to attack rampant sprawl.

Elsewhere at the conference, Bruce Katz, the Brookings Institution evangelist who led Obama’s HUD transition team, said that the still-nebulous White House Office of Urban Affairs, to be led by Bronx Borough President Adolfo Carrión, would play a key role in uniting balkanized agencies. Katz blasted the Transportation Department, for instance, calling it “the most unreconstructed agency in the federal government today” as it subsidizes the flight of jobs from urban centers. “DOT and HUD should be joined at the hip,” he said. “[Transit-oriented development] should become the norm rather than a heroic act.” Katz, who will continue advising the administration on urban strategy, sees the White House office as both bully pulpit and think tank, driving innovation across agencies that have been all too friendly toward the status quo. “If this office ends up being a concierge for bankers, then this is a failure,” he warned.

It remains to be seen how much headway the team can make in crafting what Katz called “a radically different approach to federalism.” But with the fate of American neighborhoods hanging in the balance, the crisis may indeed be a now-or-never chance to act, as Donovan soberly noted in his remarks. “We have an enormous opportunity, but it will not come again,” he said. “If we waste it, we will have no one to blame but ourselves.”

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