Calif. AG 'confident' Watt will be an effective FHFA director

By Jessica M. Karmasek | May 3, 2013

SACRAMENTO, Calif. (Legal Newsline) -- U.S. Rep. Melvin Watt, who was nominated earlier this week as the new director of the Federal Housing Finance Agency, has the backing of California Attorney General Kamala Harris.

Harris said she commended President Barack Obama on his choice.

"As Californians work to recover from the mortgage crisis, they need a strong director at the FHFA who will be an advocate for homeowners and champion their rights," she said in a statement.

"My No. 1 priority has always been the welfare of Californians, and I am confident that Congressman Watt will advance policies that serve the best interest of working families in California and across the country. I look forward to working with him."

Harris is one of nine state attorneys general who argued in a March 15 letter to Obama that the agency's current acting director, Edward DeMarco, needed to be replaced.

The other attorneys general included Delaware's Beau Biden, Illinois' Lisa Madigan, Maryland's Doug Gansler, Massachusetts' Martha Coakley, Nevada's Catherine Cortez Masto, New York's Eric Schneiderman, Oregon's Ellen Rosenblum and Washington's Bob Ferguson.

The attorneys general argued in their letter that under DeMarco's leadership, Fannie Mae and Freddie Mac have been a "direct impediment to our economic recovery" by the continued refusal to give principal relief for struggling homeowners.

The President announced his intent to nominate Watt to the post Wednesday.

Watt, a Democrat from North Carolina, has served as a Congressman since 1993 and has served for all of his 20 years as a member of the House Financial Services Committee, which oversees housing policy.

As director, he would oversee the agency that currently manages Fannie Mae and Freddie Mac following the 2008 financial crisis.

Others came out in support of Watt's nomination this week, including U.S. Sen. Elizabeth Warren, D-Mass.

"The President has made an excellent choice in nominating Mel Watt to be director of the Federal Housing Finance Agency," she said in statement. "Congressman Watt is a thoughtful policymaker with a deep background in finance and a long record as a champion for working families."

Warren, a consumer protection advocate, urged the U.S. Senate to confirm Watt "soon," so he can "get to work stabilizing shaky housing markets" and helping struggling homeowners.

She also called for the Obama administration to remove DeMarco immediately.

"Under DeMarco's leadership, the FHFA has refused repeatedly -- often with cold indifference -- to work with families struggling to save their homes," she said. "Families deserve an FHFA that pursues helpful policies like principal write-downs and abandons senseless rules like those that prevent foreclosed homes from being re-sold to their original owners.

"Such policies would speed the housing recovery and reduce the risks that American taxpayers will be called on to bail out mortgage lenders. It is time for change."

In the wake of the financial crisis, Warren served as chair of the Congressional Oversight Panel created to oversee the Troubled Asset Relief Program, or TARP. She later served as Assistant to the President and Special Advisor to the Secretary of the Treasury for the -- now, much-maligned -- Consumer Financial Protection Bureau.

The National Association of Home Builders also weighed in on Watt's nomination.

NAHB Chairman Rick Judson, a home builder and developer himself from Charlotte, N.C., applauded the move.

"After four years in conservatorship, the future of Fannie Mae and Freddie Mac stands at a crossroad," he said. "Rep. Watt brings years of experience to this position at a pivotal moment as our nation's housing market recovers.

"The NAHB looks forward to working closely with Rep. Watt to help address the many complex challenges facing the U.S. housing finance system upon his confirmation by the U.S. Senate."

Political action group also approved of Watt's nomination.

"MoveOn members join with homeowners across the country in applauding President Obama's nomination of Rep. Mel Watt to oversee the FHFA," Executive Director Anna Galland said in a statement. "Congressman Watt has a long record of defending homeowners and taxpayers by supporting equitable rules that promote economic opportunity, and pushing back hard against predatory lending practices.

"MoveOn members urge their Senators to quickly confirm Watt for director of the Federal Housing Finance Agency."

But his nomination is most likely to face opposition from the GOP.

In 2010, Obama nominated Joseph Smith, North Carolina's top banking regulator at the time, to replace DeMarco, but Senate Republicans prevented a confirmation vote.

U.S. Bob Corker, considered an influential member of the Senate Banking, Housing and Urban Affairs Committee, expressed his dissatisfaction at Watt's nomination.

"I could not be more disappointed in this nomination. This gives new meaning to the adage that the fox is guarding the hen house," said Corker, R-Tenn. "The debate around his nomination will illuminate for all Americans why Fannie and Freddie failed so miserably."

Corker argues that the issue is with Fannie Mae and Freddie Mac themselves.

"Before any nominee should be considered for this post, regardless of their qualifications, the administration should explicitly lay out how they will unwind these entities," he said.

According to the Los Angeles Times, the companies have received a combined $187.5 billion in bailout money.

From Legal Newsline: Reach Jessica Karmasek by email at

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