News Column

Obama Nominates Watt as Housing Finance Head

May 2, 2013

President Obama nominated Democratic Rep. Mel Watt to be the top regulator for Fannie Mae and Freddie Mac, moving to replace a career bureaucrat who has been sharply criticized by liberals for not doing more to help troubled homeowners.

But confirmation of Watt, a 20-year congressman from North Carolina, to be director of the Federal Housing Finance Agency is expected to be blocked by Senate Republicans.

And the fight over the nomination could make it even more difficult for Republicans and Democrats to come together on legislation to overhaul the housing finance system and replace taxpayer-owned Fannie and Freddie.

"I think it is a bridge too far to believe that Republican senators are going to confirm a Democratic politician" to oversee Fannie and Freddie, said Jaret Seiberg, a senior policy analyst in Washington with financial services firm Guggenheim Partners.

"Our worry is that this could become a very nasty confirmation fight that could derail whatever hope there was of getting housing finance legislation done during the rest of this administration," he said.

Obama said Watt, a veteran of the House committee that oversees Fannie and Freddie, would work to help struggling homeowners as the housing market is recovering.

"Mel has led efforts to rein in unscrupulous mortgage lenders. He's helped protect consumers from the kind of reckless risk-taking that led to the financial crisis in the first place. And he's fought to give more Americans in low-income neighborhoods access to affordable housing," Obama said in announcing the nomination Wednesday at the White House.

At the same ceremony, Obama introduced venture capitalist Thomas Wheeler as his nominee to chair the Federal Communications Commission. Wheeler would succeed Julius Genachowski, who plans to depart in mid-May.

Watt would succeed Edward J. DeMarco, who has been the agency's acting director since 2009. DeMarco has drawn the ire of Democrats and housing advocates for not allowing Fannie and Freddie to reduce the principal on mortgages it backs to help struggling homeowners avoid foreclosure.

In March, California Atty. Gen. Kamala Harris and attorneys general from eight other states publicly urged Obama to replace DeMarco with someone who would do more to help curtail foreclosures. Harris praised Watt's nomination, as did many other Democrats.

Sen. Elizabeth Warren (D-Mass.) said it was time for DeMarco to go.

"Under DeMarco's leadership, the FHFA has refused repeatedly -- often with cold indifference -- to work with families struggling to save their homes," Warren said.

But Republicans have said DeMarco has acted in the best interest of taxpayers, who have pumped more than $187 billion into Fannie and Freddie to keep them afloat after the government seized them in 2008.

Sen. Bob Corker (R-Tenn.), an influential Republican voice on housing finance issues, said he "could not be more disappointed" in the selection of Watt.

Before any nominee is considered to succeed DeMarco, the Obama administration should propose specific plans for shutting down Fannie and Freddie, Corker said.

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Source: Copyright Los Angeles Times 2013


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