WASHINGTON -- N.C. Commissioner of Banks Joseph A. Smith Jr. pledged to Congress on Thursday to offer not just management, but leadership, if he becomes the chief of troubled housing agencies Fannie Mae and Freddie Mac.
Smith has been in Washington most of the week, meeting with senators, congressional staff and other officials. He testified before the Senate Banking Committee on Thursday as the body considers his nomination as director of the Federal Housing Finance Agency. The agency oversees not only the two mortgage giants, but also a dozen federal home loan banks that lend to community banks across the country.
Smith's nomination comes as Fannie and Freddie remain in federal conservatorship, receiving $151 million from the Treasury Department to maintain their work in the housing market. President Barack Obama must offer Congress in January a plan for reorganizing the agencies.
Both play a critical role in the housing market by buying bundled mortgages from lenders and keeping cash in the system.
If confirmed by the full Senate, Smith would hold much of the responsibility for carrying out Obama's plan.
"The activities of Fannie Mae and Freddie Mac are national in scope but local in impact, directly affecting communities across the country," Smith said. "Leadership in this context means determining how to address critical local needs in conjunction with the agency's duties of conservatorship."
Smith faced tough questions - but no time for answers - from U.S. Sen. Richard Shelby, the committee's top Republican. In a hearing cut short by Senate floor votes, Shelby used his time to pepper Smith with questions, but said he would wait until later for written answers.
In one exchange, Shelby asked whether Smith would resist pressure from the Obama administration to have Fannie and Freddie write down the principal on some troubled mortgages - a move that could help individual homeowners but would cost taxpayers, Shelby said.
"Will you be independent, if you're confirmed?" Shelby asked.
"I will," Smith replied.
"Will you be subject to pressure from everybody?" Shelby asked.
"Well, I will be pressured by a lot of people -"
"Will you be subject to that pressure?" Shelby insisted.
Smith tried again. "I've got to look at it through the screen of, first and foremost, protecting taxpayers -"
Shelby cut him off again, asking for a written response. "I hope you'll elaborate for the record."
Smith has long championed the ability of states to protect consumers from abusive mortgage practices. In North Carolina, he oversaw implementation of the state's predatory lending laws, considered some of the toughest in the nation. He testified Thursday that he worked to get "undesirable characters" out of the mortgage licensing system.
Smith was introduced by home-state senators, Democrat Kay Hagan and Republican Richard Burr.
Hagan, who worked with Smith when she was a state senator, praised his humor and his hard work, and said Smith is the right person to make "the tough choices" needed in moving forward with the Federal Housing Finance Agency.
Smith moved to North Carolina to attend Davidson College - "becoming a Davidson Wildcat," Burr said in his introduction.
"Many will ask why anyone would want to take on the role of overseeing Fannie and Freddie," Burr said.
"Joe comes to this not seeking personal glory, but out of a sense of doing a job that must be done, and must be done well."
Smith graduated from the University of Virginia School of Law, and served in the private sector with Centura Bank, the Rocky Mount bank that was bought by Royal Bank of Canada, before becoming N.C. Commissioner of Banks.
The Senate Banking Committee, and then the full Senate, must vote on Smith's nomination this month before Congress adjourns. Otherwise, the nomination expires and Obama must put forward his name again in the next Congress.
Democratic Sen. Chris Dodd of Connecticut, chairman of the Banking Committee, called Smith eminently qualified and said he would work to get him confirmed before the end of this Congress.
