WASHINGTON — U.S. Rep. Mel Watt faces an uphill battle Thursday at a Senate confirmation hearing as the nominee to lead the federal agency that oversees mortgage finance. Many Republicans are happy with the current caretaker and worry that the Charlotte Democrat will bring a social agenda to the post.
Watt, who has represented North Carolina’s 12th District since 1993, would bring plenty of policy history but little private-sector experience to the job of heading the Federal Housing Finance Agency. The little-known agency regulates Fannie Mae and Freddie Mac, the mortgage-finance titans that have been in government conservatorship since 2008.
The Senate banking committee will take up Watt’s confirmation against the backdrop of Tuesday’s introduction in the Senate of a bipartisan proposal to revamp Fannie and Freddie, the first serious proposal to overhaul them in the nearly five years they’ve been in government hands.
Fannie and Freddie will be hot topics at Watt’s hearing, in part because many Republicans are happy with the job done by Edward DeMarco, acting head of the housing finance agency, who has put Fannie and Freddie on stronger financial footing.
What really concerns Republicans, said Barry Zigas, director of housing policy for the Consumer Federation of America, is that Watt might take a more public policy-oriented approach.
Republicans want Fannie and Freddie to focus on profitability and returns for investors who buy mortgage bonds. Democrats think the companies should play a bigger role in making access to mortgage lending easier for all Americans, especially for underserved minority communities.
Fannie and Freddie buy mortgages from banks and pool them together into bonds, a process called securitization. That allows banks to clear risks off their balance sheets and keep lending in a $10 trillion mortgage market.