The Senate voted 57-41 on Dec. 10, to confirm Rep. Mel Watt, D-N.C., to head the federal agency overseeing Fannie Mae and Freddie Mac, ending a year-long battle by the White House to install a regulator
Watt, a liberal lifelong Democratic congressman from North Carolina who favors mortgage write downs, will replace Edward J. DeMarco as director of the Federal Housing Finance Agency. DeMarco, a career civil servant who has been the agency’s acting director since 2009, has opposed allowing Fannie and Freddie to reduce the principal on mortgages they own or guarantee.
Fannie Mae and Freddie Mac, which have been under government conservatorship since being rescued by taxpayers in 2008, is currently under the control of the oversight agency, the Federal Housing Finance Agency.
In October, Senate Republicans blocked the confirmation of Watt, a liberal democrat who favors mortgage write downs. Under the old rules, Watt needed 60 votes to be confirmed. Under the new rules, a simple majority could nominate Watt. If all 100 senators are present, only 51 votes would be required. The Senate voted 56-42 to proceed to vote on Watt’s nomination — shy of the 60 required to end debate. Two Senate Republicans backed Watt in October, Sens. Richard Burr, R-N.C., and Rob Portman, R-Ohio.
But on Nov. 21, Senate Democrats pushed the “nuclear” option button, voting 52-48 to eliminate the use of the filibuster to block certain presidential nominees. This vote paved the way for the Senate to confirm Watt — without a majority — to head the mortgage housing agency that controls troubled mortgage giants Fannie and Freddie. All but three Democrats — Sens. Carl Levin of Michigan, Mark Pryor of Arkansas and Joe Manchin of West Virginia — voted for the change and all 45 Republicans opposed it.
Watt’s confirmation is likely to alter the course of FHFA. Now that the 11-term congressman is confirmed, he has become a powerful economic policymaker in housing, as the housing market recovers and the federal government contemplates the future role of Fannie and Freddie.
Former acting director DeMarco has clashed with the Obama administration on a number of housing issues, most noticeably his reluctance to allow the agency to forgive mortgage principal. Fannie and Freddie received a $187.5 billion bailout from the U.S. Treasury after they were seized by regulators in the midst of the 2008 financial crisis.
Watt’s confirmation to head the FHFA could have profound impact on the mortgage market since Fannie and Freddie currently back about two-thirds of all new mortgages. The confirmation also comes as lawmakers are pushing legislation to replace the troubled mortgage companies, which buy home mortgages and package them into securities on which they guarantee payments of principal and interest.
Watt could gain confirmation as soon as the week of Dec. 9, when the Senate returns from a recess.