| WASHINGTON, June 27
WASHINGTON, June 27 U.S. Representative Mel
Watt, President Barack Obama's nominee to oversee Fannie Mae and
Freddie Mac, on Thursday welcomed a bipartisan effort in the
Senate to shutter the two mortgage finance firms, saying it was
important to "find the right path" to change the nation's
housing finance system.
Watt made the remarks at a Senate hearing on his nomination.
So far, the 67-year-old North Carolina lawmaker has received
scant support from Republicans, who question whether he has the
technical expertise to run the Federal Housing Finance Agency,
which oversees Fannie and Freddie, the country's two largest
mortgage finance firms. The two government-sponsored enterprises
were seized by the federal government in September 2008 at the
height of the financial crisis.
Analysts have said Republican opposition could easily
scuttle Watt's nomination, given that he will likely need to
secure a super-majority of 60 votes in the Senate to overcome
procedural hurdles. Democrats control the chamber by only a
Watt's nomination is the second attempt by the White House
to fill the FHFA post. The previous nominee was blocked by
Republicans and eventually withdrew.
In his opening remarks to the Senate Banking Committee, Watt
said the current housing finance system is ripe for reform and
there is work to be done to "find the right path out of a status
quo that no one believes is desirable."
"The good news is that a broad consensus has emerged on the
direction that our next steps must take us - towards a system
driven by private capital that minimizes the risk to taxpayers,"
said Watt, who serves on the House of Representatives Financial
Services Committee and its Subcommittee on Capital Markets and
Government Sponsored Enterprises.
A bipartisan group on the Senate committee introduced a bill
this week to wind down Fannie Mae and Freddie Mac and replace
them with a government reinsurer of mortgage securities that
would backstop private capital in a crisis.
Watt, if confirmed by the full Senate, would become an
influential voice on the future of Fannie Mae and Freddie Mac.
The companies have received $187.5 billion in taxpayer funds to
stay afloat since being taken over by the federal government.
The firms, which own or guarantee half of all U.S.
mortgages, were chartered by Congress to expand mortgage finance
but operated as private, profit-making companies before they
were seized by the government. They buy mortgages from lenders,
which they repackage as securities to be sold to investors.
The committee's chairman, Democrat Tim Johnson, called Watt
"well-qualified" and said he wanted to move the nomination
expeditiously. The panel is expected to vote on the nomination
following an early July recess.
"It is my hope that this time politics will be put aside so
that we can focus on the management and oversight of the housing
finance system," Johnson said.
The committee's ranking Republican, Mike Crapo, of Idaho,
said the position "requires very specific expertise."
"Any nominee in this important position must be politically
independent and have the necessary policy and technical
expertise," Crapo said.
The FHFA's current head, acting Director Edward DeMarco, has
held the position since 2009. He has been criticized by
Democrats and consumer and housing advocacy groups for opposing
more aggressive mortgage aid for troubled borrowers.
Fannie Mae and Freddie Mac, which charge lenders a fee in
return for guaranteeing principal and interest on mortgages, are
now posting record profits.