By Margaret Chadbourn
WASHINGTON, April 18 President Barack Obama is
preparing to name a new regulator to oversee mortgage financiers
Fannie Mae and Freddie Mac, and economist
Mark Zandi is a leading choice among the candidates, according
to people familiar with the process.
Zandi would consider the post if offered to him by Obama,
according to one source, who requested anonymity in order to
discuss personnel matters.
Although the White House's decision has not been made final,
the vetting process is well underway to find a permanent
director for the Federal Housing Finance Agency. The position
requires Senate confirmation, and Republicans might try to block
an Obama nominee.
Zandi, chief economist of Moody's Analytics, may have better
prospects for winning confirmation, analysts said. While a
registered Democrat, Zandi was an economic adviser to Republican
Senator John McCain during his 2008 presidential campaign.
"A Zandi nomination would help the administration avoid an
awkward political fight," wrote Jaret Seiberg, a senior policy
analyst with Guggenheim Securities. But he added that while
Zandi is a "strong leader," the ideas he favors are opposed by
The White House would not comment on the appointment or
current deliberations. Zandi had no comment.
FHFA's current chief, Edward DeMarco, is a career civil
servant who has been serving in an acting capacity. He was a
deputy at FHFA when he was named to the position in 2009 and has
never been selected as the agency's permanent director or gone
through the Senate confirmation process.
Representative Mel Watt, a North Carolina Democrat, is also
considered a possible candidate to replace DeMarco, according to
sources familiar with the matter. However, there are concerns
that Senate Republicans would likely block the longtime
"The administration realizes that Republicans will never
confirm a Democrat who has served for two decades on Capitol
Hill to run FHFA," said Seiberg.
The next FHFA director would be expected to guide Fannie Mae
and Freddie Mac through an overhaul process that would reduce
their role in the housing finance system. Both Democrats and
Republicans agree that Fannie Mae and Freddie Mac should
eventually be wound down, but have failed to agree on what
should replace them.
During a Senate Banking Committee hearing on Thursday
focused on FHFA oversight, Republican Senator Bob Corker of
Tennessee expressed concern that the White House was preparing
to move ahead on the leadership decision before providing
clarity for Congress on a future solution for Fannie Mae and
"I don't know why anyone would change something that is
working so well. But I think that if that were to be the case,
we certainly should hear from the administration explicitly
about what they want to happen with Fannie and Freddie before
that occurs," Corker said.
Fannie Mae and Freddie Mac were seized by the government in
2008 as mortgage losses mounted and currently back about half of
existing home loans. The two government-sponsored enterprises
have received $187.5 billion of taxpayer funds to stay afloat.
The two companies do not make loans. Instead, they provide
financing to banks and lenders by purchasing mortgages, which
they either keep on their books or package as securities to be
sold to investors with a guarantee.
DeMarco has already worked to shrink Fannie and Freddie's
footprint in the mortgage market in the absence of direction
from the White House and Congress. Both companies were
profitable in 2012 after suffering losses for several years.
"Hopefully, the administration will push forward with
reform. But I don't see any sign of it," said Phillip Swagel,
who served in the Treasury Department under President George W.
Bush. "In the meantime, DeMarco and FHFA deserve a lot of credit
for doing what they can to move toward a better housing finance
Liberal activists and political interest groups have joined
Democrats in criticizing DeMarco over his decision to block
Fannie Mae and Freddie Mac from reducing loan principal for
borrowers who owe more than their homes are worth, a position
which is also at odds with the White House. His stance has won
praise from some Republicans who fear the loan modifications
could lead to further losses for taxpayers.
Obama's last nominee to head FHFA in 2011, North Carolina
banking commissioner Joseph Smith, was blocked by Republicans
and eventually withdrew his name from consideration.