* Nomination advanced out of committee on a party-line vote
* Some Republican support needed for Watt's final approval
* Panel also approved other presidential nominees
By Margaret Chadbourn
WASHINGTON, July 18 The Senate Banking Committee
on Thursday backed Representative Mel Watt to be the next
regulator of government-controlled mortgage financiers Fannie
Mae and Freddie Mac, sending the nomination
to the full Senate where it faces an uncertain fate.
President Barack Obama nominated Watt, a Democrat from North
Carolina, to replace Edward DeMarco as head of the Federal
Housing Finance Agency on May 1, but many Republicans were quick
to make clear they would not support the nominee.
Members of the committee approved the choice 12-10 strictly
along party lines, a sign of the trouble the nomination is
likely to face in the full chamber, where some Republican
support will likely be needed for Watt to win final approval.
"Congressman Mel Watt is well-qualified to lead the FHFA in
its conservatorship of Fannie Mae and Freddie Mac, and he too
should be confirmed without delay," said the panel's chairman,
Democratic Senator Tim Johnson of South Dakota.
The panel also approved Jason Furman to head Obama's Council
of Economic Advisers, and Michael Piwowar and Kara Stein to be
members of the Securities and Exchange Committee. Richard
Metsger, nominated to join the National Credit Union
Administration Board, was approved as well. It also backed
current SEC Chair Mary Jo White to serve a full term.
In contrast to Watt, who has served in the House for two
decades, those nominees garnered Republican support. To win
confirmation by the full Senate, the 67-year-old North Carolina
lawmaker will likely have to win a super majority of 60 votes to
overcome Republican procedural hurdles.
Democrats control the chamber, with the current breakdown at
52 Democrats, 46 Republicans, and two Independents, who both
caucus with the Democrats.
Republicans who oppose Watt's nomination contend he lacks
the technical expertise needed to take on the conservatorship of
Fannie Mae and Freddie Mac, which currently back about half of
existing U.S. home loans. Watt is a long-time member of the
House Financial Services Committee, which has jurisdiction over
Fannie Mae and Freddie Mac, and a former head of the
Congressional Black Caucus.
"The conservator must be an apolitical financial regulator
with technical expertise," said Senator Mike Crapo of Idaho, the
top Republican on the panel. He voiced skepticism that Watt had
the skills needed to oversee Fannie Mae and Freddie Mach and
head the FHFA, a post that is "like no other position in our
If Watt's nomination does not clear the Senate, it would
mark the Obama administration's second failed attempt to win
confirmation for a permanent FHFA director. DeMarco has been
serving in an acting capacity since 2009, and Obama's first
attempt to fill the FHFA post met strong Republican opposition
and the president's nominee Joe Smith, then the North Carolina
banking commissioner, eventually withdrew in 2011.
Fannie Mae and Freddie Mac were seized by the government in
2008 as mortgage losses threatened their solvency. They were
propped up with $187.5 billion in taxpayer funds, but have since
returned to profitability and have paid about $132 billion to
the U.S. Treasury in dividends for the government's stake.
DeMarco has faced push back from the Obama administration,
Democrats, and housing and consumer advocates for blocking a
proposal to allow Fannie Mae and Freddie Mac to write down
principal on troubled loans that they back.
At his confirmation hearing on June 27, Watt signaled he
would give strong consideration to such a proposal.
In addition to weighing in on the question of loan
forgiveness, the next FHFA director would be expected to guide
Fannie Mae and Freddie Mac through an overhaul to reduce their
dominant role in the housing finance system.
Watt has welcomed legislation unveiled by two members of the
panel that would dismantle Fannie Mae and Freddie Mac over five
years. The measure would still maintain a federal role in
backstopping the mortgage market.
In addition to approving Watt, and favorably voting for the
four other presidential nominees, Ohio Democrat Sherrod Brown
said he has some outstanding concerns about the new SEC chair
White and her prior ties to Wall Street during her days working
as a defense attorney.
"I voted against Ms. White in March. At the time I said I
hope she proves me wrong. Unfortunately at this point, I view
her record as more negative than positive. She has not yet met
the burden of proof to change my mind," said Brown.
Not considered controversial, Piwowar, a Republican, and
Stein, a Democrat, will replace outgoing SEC Commissioners Troy
Paredes and Elisse Walter.
Unlike Watt, all other of the nominations that cleared the
banking committee are expected to sail through the Senate.