President-elect Barack Obama on Saturday named New York City's housing commissioner to his Cabinet, turning to a former Clinton administration aide to help deal with an issue at the heart of the U.S. economic crisis.
If confirmed by the Senate, Shaun Donovan will lead the Housing and Urban Development Department at a time when the mortgage crisis is being blamed for the financial market turmoil that has dragged the nation into a recession.
Obama praised Donovan's record in New York, where he managed a $7.5 billion plan with a goal of putting a half-million New Yorkers in affordable housing. The Harvard-educated architect also kept foreclosures to a minimum in the city's low- and moderate-income home ownership plan, with just five out of 17,000 participating homes.
"We can't keep throwing money at the problem, hoping for a different result," Obama said during his radio address released early Saturday. "We need to approach the old challenge of affordable housing with new energy, new ideas, and a new, efficient style of leadership. We need to understand that the old ways of looking at our cities just won't do."
With fallout from the housing market continuing and more people losing their homes, Donovan faces a tough challenge.
More than 259,000 homes received a foreclosure-related notice in November, up 28 percent from a year earlier, RealtyTrac reported last week. The news comes as the Mortgage Bankers Association reported a record one in 10 American homeowners with a mortgage was either at least one month behind on their payments or in foreclosure at the end of September.
While the mortgage crisis has threatened cities, Obama said it also provides a chance to rethink how the federal department can help people in cities. He said Donovan, who also has a degree in public service from Harvard, will bring "fresh thinking unencumbered by old ideology and outdated ideas."
Obama's selection of Donovan marks the 11th post he has filled in his cabinet, in just over a month since his election as the first African-American president.
Still to come are announcements of his selections to head the Central Intelligence Agency, the Environmental Protection Agency, and the departments of energy, education, interior, labor, transportation and agriculture.
Donovan's appointment was something of a surprise. Most speculation has centered around Miami Mayor Manny Diaz, Atlanta Mayor Shirley Franklin or Bronx borough President Adolfo Carrion Jr.
HUD often has been led by someone who is a minority; Donovan is white. Latino groups were pushing heavily for Diaz, following in the footsteps of Clinton appointee Henry Cisneros of San Antonio, Texas. Bush picked Mel Martinez of Florida, a Hispanic, and Alphonso Jackson of Texas, an African American.
Even the rollout of the selection — announced at 6 a.m. Saturday via e-mail and later in Obama's Saturday radio address — broke with how Obama has announced previous Cabinet positions. For his other appointees, Obama invited reporters to a news conference, along with the nominee, and took questions.
Obama's last news conference on Thursday, to introduce former Senate Majority Leader Tom Daschle as his pick for Health and Human Services, was dominated by questions about the corruption scandal swirling around Illinois Gov. Rod Blagojevich, who is accused of putting Obama's Senate seat up for sale. Obama has said he's confident none of his aides were involved in any of the alleged deals.
New York Mayor Michael Bloomberg named Donovan, a New York native, to head the city's Housing Preservation and Development Department in 2004. He has been the point person for implementing Bloomberg's plan to build and preserve 165,000 affordable housing units for 500,000 people by 2013. It is the largest housing plan in the nation.
Donovan took a leave-of-absence as New York's housing commissioner to campaign for Obama.
Before working for Bloomberg, he worked at Prudential Mortgage Capital Company. And before that, he was deputy assistant secretary for multifamily housing at HUD during the Clinton administration. In that role he was the government's chief administrator for managing privately owned, government-subsidized housing.
The housing subsidy programs provided over $9 billion annually to 1.7 million families. He also oversaw some 30,000 multifamily properties with more than 2 million housing units.
Donovan, 42, has a reputation for finding new ways to create and preserve affordable housing. As New York's housing commissioner, he spearheaded the creation of the $200 million New York Acquisition Fund, a collaboration between the city, foundations and financial institutions. It is intended to help small developers and nonprofit groups compete for land in the private market.
He was acting commissioner of the Federal Housing Administration during the transition from Clinton to President George W. Bush.