Senate Banking Committee Confirms Mel Watt To Head FHFA

Posted by Patrick Barnard on July 18, 2013 No Comments
Categories : Required Reading

By a 12-10 party line vote, the Senate Banking Committee on Thursday approved the nomination of Rep. Mel Watt, D-N.C., to head the Federal Housing Finance Agency (FHFA).

The truce between Senate Democrats and Republicans reached earlier this week averted the so-called ‘nuclear option’ threatened by Majority Leader Harry Reid, D-Nev., and cleared the way for six of Obama's executive appointments to be confirmed. However, Watt's nomination is a separate affair.

Providing Senate Republicans do not threaten to block Watt's nomination – and, should that happen, Senate Democrats do not react by unilaterally changing filibuster rules to get the votes they need – the full Senate will likely vote on his confirmation in the upcoming weeks.

However, Watt will need at least some Republican support in order to get the 60 votes he needs in order to be confirmed, as the Democrat majority holds 54 seats in the Senate. The strictly party line vote in the Senate Banking Committee could be interpreted as a sign that Watt may not receive enough votes to win the confirmation.

Most Republicans oppose Watt's nomination, arguing that he lacks the qualifications to manage the FHFA, the regulator for mortgage financiers Fannie Mae and Freddie Mac. The agency has been without a confirmed director since 2009, when former director James Lockhart left the post. Since then Republican Edward DeMarco has been serving as acting director of the FHFA.

Congressional Democrats have criticized DeMarco for rejecting a proposal that would allow forbearance on mortgage principal for underwater borrowers with Fannie and Freddie loans – a concept that Watt has said he would consider, as it would help reduce the number of foreclosures.

Watt's nomination marks the second time the Obama administration has tried get a new FHFA director in place. Two years ago, the president's first pick, North Carolina Banking Commissioner Joseph Smith, withdrew from the running after Republicans blocked a vote on his confirmation.

Since his nomination, Watt has tiptoed around questions regarding the policies he would enact at the FHFA. He has vowed to continue many of the initiatives that DeMarco has started but, at the same time, has indicated that he may revisit others, such as reducing mortgage debt and expanding a refinance program for struggling borrowers, depending on economic conditions.

The Senate Banking Committee's approval of Watt comes as members of Congress have been drafting legislation to reform the housing market and eliminate Fannie and Freddie. These include a draft bill recently introduced by Sens. Bob Corker, R-Tenn., and Mark Warner, D-Va., and a separate bill introduced in the House by Rep. Jeb Hensarling, R-Texas. Should Watt be confirmed, he will likely play a major role in overseeing the implementation of housing finance reforms.

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