Watt was nominated in May to be the regulator of Fannie and Freddie, a decision that drew fierce opposition from Senate Republicans who argued someone with technical expertise in mortgage finance markets not a politician should lead the agency.In October, Watt failed to clear a 60-vote threshold necessary for his nomination to advance. But a recent controversial Senate rule change, which requires only a simple majority vote to get around procedural hurdles, cleared the way for Watt’s confirmation.
Senate Republicans on Tuesday continued to criticize Obama for choosing a politician to lead the FHFA and blast their Democratic colleagues for last month’s historic rules change that took away the minority party’s ability to filibuster most presidential nominees.
“This is an independent agency with a highly complex task impacting our entire economy and it is for this reason that many senators noted the reason to avoid politics and to emphasize the technical expertise needed to fill this position,” said Sen. Mike Crapo (R-Idaho), the ranking member of the Senate Banking Committee.
Democrats praised Watt’s experience, noting his long tenure on the House Financial Services Committee and argued it’s time for the agency to have a confirmed director.
“He’s the right person to protect Americans who work hard and play by the rules every day, and he’ll be the right regulator to make sure the kind of crisis we just went through never happens again.,” Obama said in a statement.
Watt was a part of a congressional delegation that traveled to South Africa for Nelson Mandela’s memorial service, and his office said he would not be available to comment until later in the week.
Watt, 68, will become the first regulator of Fannie and Freddie confirmed by Congress since August 2009 when James Lockhart left office and Ed DeMarco was promoted to acting director of the FHFA. DeMarco has held the job ever since.
Watt’s resignation from Congress will open up his House seat in North Carolina’s Democratic-leaning 12th Congressional District, where a handful of Democrats have already begun raising money to campaign for the soon-to-be-vacant seat.
Rep. Maxine Waters (D-Calif.), the top Democrat on the House Financial Services Committee who has served on the panel with Watt for years, said she is “elated” to see her colleague confirmed.
“I believe Mel Watt has the vision, experience and temperament necessary to ensure the FHFA remains focused on the long-term stability of the economy and the housing finance system,” Waters said.
Watt will take over FHFA as both the House and Senate work on legislation to get rid of Fannie and Freddie and develop a new housing finance system. The two companies were taken over in September 2008 and received $187.5 billion in taxpayer bailouts. As the housing market has recovered, Fannie and Freddie have sent record profits back to taxpayers and by early next year they are expected to return to the government as much money as they received in bailouts. Under the terms of the bailout, they will remain under government control.
There will be several big decisions Watt will face in managing the two companies once he takes office, including whether to put in place a debt forgiveness program for struggling homeowners that DeMarco rejected and determining the maximum loan size Fannie and Freddie can guarantee.
DeMarco is expected to stay on and assist Watt with the transition, though it’s unclear how long he will remain at the agency.
Watt has served on the Financial Services Committee since he first took office in 1993. His Democratic colleagues on the panel, which has jurisdiction over housing policy, said Tuesday that the knowledge Watt has gained during his tenure on the committee will be an asset as he transitions into a regulatory role.
“I’ve worked side by side with Mel Watt for five years and I can’t think of a lot of people who have worked harder in understanding extremely complicated issues around mortgages and derivatives,” said Rep. Jim Himes (D-Conn.).
Committee Republican said they were hopeful that once Watt assumes his new job, the personal relationships he has built with House members will ensure an open line of communication between the FHFA and lawmakers.
“You would hope that he would have an open-door policy to talk to his former colleagues as we all work on what to do with Fannie and Freddie in the long term,” said Rep. Randy Neugebauer (R-Texas), who co-sponsored a bill this year along with committee Chairman Jeb Hensarling (R-Texas) that would abolish Fannie and Freddie and significantly reduce the role of the Federal Housing Administration.