SHAUN DONOVAN is the second-longest-serving secretary of housing and urban development in the department’s 48-year history, and, by general consensus, he is one of the better ones. A hard worker and genuine public policy expert, Mr. Donovan not only kept the sprawling department out of any major scandals on his watch — something his predecessors were not always able to do — but he also oversaw valuable reforms such as the institution of a risk-management system at the Federal Housing Administration.
Still, in the best of times HUD secretary is a thankless job, and the past five years were not the best of times, spent managing the collapse of the entire U.S. housing market. As Mr. Donovan prepares to move on to a new job, at the White House Office of Management and Budget, he unavoidably leaves much business unfinished. At the top of the list is a permanent new structure for mortgage finance, to replace the quasi-nationalized Fannie Mae and Freddie Mac.
The FHA is hardly out of the woods. It required a $1.7 billion bailout in 2013; its capital base has since stabilized, but its role is uncertain amid the usual tug of war between Republicans who want to scale back the agency’s role and Democrats who see it as a source of cheap funding for first-time home buyers.
There has been a lot of talk about the political impact of President Obama’s choice of San Antonio Mayor Julián Castro to replace Mr. Donovan at HUD. Mr. Castro is thought to be a potential national Democratic candidate, perhaps for vice president in 2016. If so, he would not be the first “rising star” to use the HUD post to advance his ambitions: Jack Kemp went from HUD secretary in the first Bush administration to GOP veep nominee in 1996; New York Gov. Andrew M. Cuomo (D) probably owes his current position partly to headlines and connections he made at HUD in the Clinton administration.
Whatever his political future, the best thing for Mr. Castro and the country is for him to do a good job at HUD. U.S. housing policy is at a crossroads, with familiar post-World War II institutions exhausted and nothing more modern yet erected in their place. After a half-century of the federal government pouring resources into single-family housing, the homeownership rate is about what it was in 1965. Americans need to know what Mr. Castro thinks about this problem and what his ideas are for addressing it. Those are the subjects the Senate should thoroughly probe at his confirmation hearing.