Representative Mel Watt, a North Carolina lawyer who has served in the House since 1993, will oversee the future of Fannie Mae (FNMA:US) and Freddie Mac after winning Senate confirmation to lead the Federal Housing Finance Agency.
Watt, 68, was confirmed on a 57-to-41 vote yesterday less than three weeks after Senate Democrats changed the chamber’s rules to let nominations pass with a simple majority rather than the 60 votes required for three decades. Under the previous rules, Republicans blocked Watt and other nominees from advancing.
Once he is sworn in, Watt will be in a position to set and modify terms for the 50 percent of U.S. mortgages owned or backed by Fannie Mae and Freddie Mac, which are operating under federal conservatorship since being seized by regulators during the 2008 credit crisis.
Watt’s nomination failed to advance on Oct. 31 when it was blocked by Senate Republicans who questioned his qualifications. He became the first sitting member of Congress since 1843 to be denied confirmation to a major executive-branch post.
Watt said last week that he was insulted that Republicans questioned his ability to do the job.
“It’s hard to be insulted if you know it’s just politics, but when people start to say, ‘I’m doing this because he’s unqualified,’ then it is insulting and then you start to take it personally,” he said in an interview in the Capitol.
Watt will take over at a pivotal time for the government-sponsored enterprises, which provide liquidity to the housing market by packaging loans into securities on which they guarantee payments of principal and interest.
Under his leadership, the independent agency could boost aid to troubled borrowers and slow efforts to shrink Washington-based Fannie Mae and Freddie Mac (FMCC:US) of McLean, Virginia.
“Watt’s a fine fellow,” Senator Lindsay Graham, a South Carolina Republican, said yesterday. Graham said he opposed Watt because he has reservations about the position that oversees the two government-backed companies.
With the housing market recovery, Fannie and Freddie have begun posting record profits and sending billions of dollars in dividends to the Treasury. Senate lawmakers are working on a bipartisan plan to wind down the companies and replace them as part of plan to revamp U.S. housing finance.
Investors including hedge funds have been buying the companies’ stock, once thought to be worthless, in a bet that lawmakers will instead return them to the private market. Watt’s job will be to set an interim course for Fannie Mae and Freddie Mac while their fate is decided.
Watt was nominated by President Barack Obama seven months ago. Yesterday, in a statement released by the White House, Obama praised him as “the right regulator to make sure the kind of crisis we just went through never happens again.”
Watt will replace FHFA Acting Director Edward J. DeMarco, a career bureaucrat who has focused on improving the companies’ bottom line and conserving assets for taxpayers. The companies received a $187.5 billion bailout from the U.S. Treasury after the government rescued them from the brink of collapse.
After Watt’s nomination failed to advance, the Senate voted Nov. 21 to alter its rules to let a simple majority confirm all presidential nominees except Supreme Court justices.
Watt probably won’t be sworn in this week, as he joined the congressional delegation traveling for the funeral of former South African president Nelson Mandela.
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