Barack Obama can absolutely replace Ed DeMarco

July 31, 2012

I mentioned below that there might be a legal barrier to Barack Obama firing chief Fannie and Freddie regulator Edward DeMarco, as the heads of independent agencies have to be fired for cause. This could frustrate liberals such as Paul Krugman who want DeMarco gone. But Adam Levitin, a professor at Georgetown University Law Center who is an expert on housing finance law, informs me that this worry is misplaced. Obama may not be able to fire DeMarco, but he sure can replace him. Here's Levitin:

The FHFA statute provides that the FHFA Director is only removable "for cause".  12 U.S. Code sec. 4512. That sort of provision usually means that the President can only remove the officer for malfeasance or misconduct, not just a policy disagreement. (See In re Humphrey's Executor.).
DeMarco, however, is an Acting Director…This means he can be removed at any time simply by the Presidential appointment of a Director. That would require Senate confirmation (not happening before 2013 under political realities and the ridiculous Strom Thurmond rule) or a recess appointment (possible).  Given the way Obama has interpreted the recess appointment power for the CFPB Director and NLRB appointments earlier this year, the ability to do a recess appointment means he can replace DeMarco pretty much whenever he wants.

There are caveats. DeMarco is civil service, and so can only be moved, not fired outright. And Levitin notes that replacing him means Obama can't blame DeMarco for the state of the housing sector. But Obama could have a new FHFA director whenever he wants one.

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Dylan Matthews · July 31, 2012