Obama's Pick For HUD To Tackle Foreclosures

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The Senate Banking Housing and Urban Affairs Committee has held a confirmation hearing for Shaun Donovan, President-elect Barack Obama's nominee to be Housing secretary. Donovan has earned high marks as New York City's housing chief and is expected to play a key role in the Obama's efforts to stem the rising tide of mortgage foreclosures.

MICHELE NORRIS, host:

This is All Things Considered from NPR News. I'm Michele Norris.

MELISSA BLOCK, host:

And I'm Melissa Block. Today on Capitol Hill, the president-elect's nominee to head the Department of Housing and Urban Development was welcomed with open arms by senators from both parties. The nominee is Shaun Donovan, the New York City housing commissioner. And with his appointment, Barack Obama pledged to bring fresh thinking to HUD. The current economic crisis was partly caused by the collapse of home mortgages, but HUD has been largely absent from the debate. NPR's Brian Naylor reports on today's confirmation hearing.

BRIAN NAYLOR: Democrats on the Housing Committee made clear their dissatisfaction with HUD's actions during the Bush administration. The panel's chairman, Connecticut Democrat Christopher Dodd, said the agency has, in his words, been mismanaged and ridden by scandal in the last several years.

Senator CHRISTOPHER DODD (Democrat, Connecticut; Chair, U.S. Senate Committee on Banking, Housing and Urban Affairs): Fundamentally, HUD has been left adrift at a time when bold leadership and clear direction were never more important.

NAYLOR: New Jersey Democrat Robert Menendez said HUD has been relegated to junior status.

Senator ROBERT MENENDEZ (Democrat, New Jersey; Member, U.S. Senate Committee on Banking, Housing and Urban Affairs): While HUD never seems to gather the press attention as other agencies do to American families, your future role at this agency may be far more important. And I agree with those who say that HUD has been sitting at the kids' table, and it is time for that to change.

NAYLOR: Donovan, a boyish-looking 42, is something of a housing wunderkind. A Harvard-trained architect, he's worked on both sides of the housing issue. He was deputy assistant secretary for multifamily housing at HUD during the Clinton administration. He worked at Prudential Mortgage Capital Company. And since 2004, he's been New York City's housing commissioner, where he's led a multibillion dollar effort to build and preserve some 165,000 units of affordable housing. At HUD, he'll have his hands full, as he acknowledged today.

Mr. SHAUN DONOVAN (Nominee, Secretary, U.S. Department of Housing and Urban Development, Barack Obama Administration): It is estimated that approximately 2.2 million homes went into foreclosure in 2008. One in 10 American families who owns a home is in financial trouble. Housing is at the root of the market crisis we are now experiencing, and HUD must be part of the solution.

NAYLOR: The senior Republican on the housing panel, Senator Richard Shelby of Alabama, said he wants Donovan to spend some time investigating what went wrong with subprime mortgages. He said the federal government may have made things worse.

Senator RICHARD SHELBY (Republican, Alabama; Ranking Republican, U.S. Senate Committee on Banking, Housing and Urban Affairs): If we don't deconstruct what went wrong and how to fix it, we'll never fix it, will we?

NAYLOR: Donovan said there was blame to go around among lenders and homeowners, promising to make a system that was open, transparent, fair and flexible. That seemed to satisfy Shelby, who said he looks forward to supporting the nomination. Senators also asked Donovan to ensure HUD makes better use of a program, approved last summer, to help homeowners facing default to refinance with lower-cost, government-backed mortgages. So far, only a fraction of those eligible to take part in the program have applied. Donovan also pledged to address the problem of homelessness, especially among families who have lost their homes due to foreclosure.

Mr. DONOVAN: There has been a dramatic, really, movement across the country over the last decade or so that has focused energy around the problem of homelessness among individuals. And so, I think if we can focus the same kind of energy and partnership, we can make the same kind of progress on family homelessness.

NAYLOR: In the end, there was nary a dissenting voice heard from Housing Committee senators about Donovan, and Chairman Dodd said he was hoping for a committee vote on the nomination by the end of the week. Brian Naylor, NPR News, Washington.

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Obama Picks Pledge Broad Policy Changes

Hillary Clinton may be grabbing Tuesday's spotlight as a Senate panel considered her nomination for secretary of state, but President-elect Barack Obama's picks for energy, education and housing and urban development secretaries also were facing Capitol Hill hearings.

The nominees have the potential to influence key policy initiatives in areas of climate change, the foreclosure crisis and how to fix America's struggling public school system.

Nobel Prize-winning physicist Steven Chu said if confirmed as energy secretary, he will aggressively pursue policies aimed at addressing climate change and achieving energy independence.

Education Secretary-designate Arne Duncan pledged to overhaul President Bush's No Child Left Behind initiative, which has been criticized by some for relying too heavily on standardized tests to assess student and teacher performance.

Shaun Donovan, who has been tapped to head the Department of Housing and Urban Development, will be charged with heading an agency that has been criticized for its implementation of a mortgage refinance program called Hope for Homeowners. It was designed to rescue up to 400,000 troubled borrowers but has reworked fewer than 1,000 loans.

Chu's strong backing of the science that indicates a man-made cause for global warming could be key to making good on Obama's campaign promise to reverse White House policy on controlling greenhouse gas emissions.

"It is now clear that if we continue on our current path, we run the risk of dramatic, disruptive changes to our climate in the lifetimes of our children and grandchildren," Chu said at his confirmation hearing before the Senate Energy and Natural Resources Committee.

Chu said the Obama administration would push for a carbon cap-and-trade system, which would require power plants, oil refineries and other industrial facilities to buy and sell pollution permits. The move is aimed at putting a market limit on overall emissions.

That Obama is pushing for such a plan "speaks to the importance he views this area," Chu said.

Duncan, 44, has been CEO of Chicago public schools since 2001. His tenure has featured rising student test scores and graduation rates, and he is credited with improving the quality of teaching. However, his critics contend that test scores already were on the upswing when he took over the school system.

Duncan expressed concern that the federal No Child Left Behind program, a cornerstone of the Bush domestic policy legacy, could in fact leave behind children with disabilities or those learning English as a second language.

"Let's not take too blunt an instrument to an entire school," Duncan said. "Those teachers are doing a herculean job and we need to recognize that. We need to reward that."

HUD nominee Donovan told senators that the Hope for Homeowners program had addressed only "a tiny trickle" of the problem loans.

"I think it's clear to everyone that there needs to be some changes to make sure that program is effective," Donovan said.

Among Donovan's tasks as HUD secretary will be to manage the Federal Housing Agency, a Depression-era program that policymakers hope will become an important tool to refinance troubled mortgages.

Meanwhile, the Senate Budget Committee was examining Obama's picks of Peter Orszag for director of the Office of Management and Budget and Robert Nabors II for deputy OMB director.

From NPR staff and wire reports

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