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Watt nominated for housing finance post
Oversight includes Fannie Mae, Freddie Mac
 
Published Wednesday, May 1, 2013 8:04 am
by The Associated Press

WASHINGTON — President Barack Obama intends to nominate Rep. Melvin Watt of Charlotte to head the Federal Housing Finance Agency, the government regulator that oversees lending giants Fannie Mae and Freddie Mac, and he has chosen a former cable and wireless industry lobbyist to head the Federal Communications Commission, according to White House officials.

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U.S. Rep. Mel Watt (D-N.C.)


If confirmed by the Senate for the FHFA post, Watt, a 20-year veteran of the House, would replace Edward DeMarco, an appointee of President George W. Bush who has been a target of housing advocates, liberal groups and Democratic lawmakers.


Also on Wednesday, Obama plans to nominate Tom Wheeler as the country’s top telecommunications regulator. He is expected to name FCC Commissioner Mignon Clyburn to serve as acting chairwoman while Wheeler awaits Senate confirmation.


Wheeler is former head of the Cellular Telecommunications & Internet Association and the National Cable Television Association. Since 2005, he has been a venture capitalist at Core Capital Partners. Wheeler would replace outgoing chairman Julius Genachowski, who announced in March he would be stepping down.


The White House officials spoke about the nominations on condition of anonymity since the selections had not yet been officially announced.


Watt’s nomination comes at a crucial time for Fannie Mae and Freddie Mac, two government sponsored mortgage-finance enterprises that the government rescued at the height of the financial crisis in September 2008 as they teetered neared collapse from losses on soured mortgage loans.


Taxpayers have spent about $170 billion to rescue the companies. So far, they have repaid a combined $55.2 billion.


Fannie and Freddie together own or guarantee about half of all U.S. mortgages, or nearly 31 million home loans. Those loans are worth more than $5 trillion. Along with other federal agencies, they back roughly 90 percent of new mortgages.


The nomination also comes as the housing industry is making a comeback. Home prices are up, foreclosures are down and housing construction is on the rise. Moreover, Fannie Mae had its biggest yearly profit last year, earning $17.2 billion.


Watt, a senior member of the House Financial Services Committee and former chairman of the Congressional Black Caucus, played an influential role in the passage of a financial regulatory overhaul in 2010. That legislation, however, did not address the fate of the major mortgage lenders, an issue likely to come up during Obama’s second term.


Watt represents the Charlotte area, home base of behemoth Bank of America Corp. He becomes yet another high-profile African-American and the second Charlotte resident nominated by Obama in three days to a top government post. On Monday, Obama nominated Mayor Anthony Foxx to head the Transportation Department.
Watt, who has a consistently liberal voting record, is expected to face Republican opposition to his confirmation. The White House was already lining up supporters who might hold some sway with GOP senators.


Erskine Bowles, a fellow North Carolinian and former White House chief of staff under President Bill Clinton, praised Watt as a first-rate selection. Both men were classmates at UNC Chapel Hill. Bowles, the Democrat in a debt-tackling partnership with former Republican Sen. Alan Simpson of Wyoming, said Watts brings “a bright mind, great work habits and an understanding of how Washington works to the job.”


Hugh McColl, former Bank of America chairman and CEO, also welcomed Watt’s nomination. McColl says he has known Watt for four decades, first meeting him through his brother-in-law, former Rep. John Spratt, D-S.C., who attended Yale Law School at the same time as Watt.


“What he brings to everything, doesn’t matter the subject, is an open mind,” McColl said. “He has clarity of thought.”


Charlotte is a major banking center, and the top donors to Watt’s political campaigns over the years have been bank political action committees and bank officials and employees.


His nomination comes nearly a year after DeMarco, who has been acting director, stood by a decision to bar Fannie and Freddie from reducing principal for borrowers at risk of foreclosure, resisting pressure from the administration. DeMarco long has opposed allowing the mortgage giants to offer principal reduction.


In March, attorneys general from nine states, led by Democrats Eric Schneiderman of New York and Martha Coakley of Massachusetts, sent Obama a letter saying that under DeMarco, Fannie and Freddie have been a “direct impediment to our economic recovery.”


Associated Press writer Marcy Gordon contributed to this report.

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