The U.S. Senate has officially confirmed Rep. Mel Watt as the new director of the Federal Housing Finance Agency (FHFA) following a controversial process that included changing the majority rule for Senate confirmations.
Watt (D-N.C.) will succeed current acting director Edward DeMarco upon being sworn in, at which point he will also assume oversight of Fannie Mae and Freddie Mac, which the FHFA regulates.
DeMarco has himself been a controversial figure since assuming his role in 2009, with some Democrats protesting his stance on not allowing Fannie and Freddie to reduce mortgage principal amounts for struggling or underwater borrowers.
The controversy surrounding Watt’s nomination stemmed largely around his as-of-yet unknown vision for the two government-sponsored entities and their role in the housing finance system. The news of his confirmation has garnered a mixed bag of praise and caution.
The National Association of Home Builders applauds the confirmation, chairman Rick Judson said in a statement.
“[Watt’s] nearly two decades of experience working on housing issues as a member of the House Financial Services Committee makes him the right man for the job during this critical period as Congress debates changes to overhaul the U.S. housing finance system,” he said.
Analysts also consider Watt’s confirmation favorably based on the representative’s prior testimony, speeches, and legislation, saying it could be a “catalyst” for 2014 housing demand.
“With Watt’s confirmation, we believe homeownership expansion has two proponents in the Fed and the FHFA, which oversees the GSEs. The Fed’s continuing policy of buying 10-year Treasuries and agency MBS to depress rates has held national average mortgage rates below 5.0% for several years,” said Jay McCanless, an analyst with Sterne Agee.
There’s also potential for Watt to authorize more affordable mortgage options, McCanless said, such as those with 40-year terms or interest-only mortgage, which could widen the pool of potential home buyers and spur additional housing demand.
Financial Services Committee Chairman Jeb Hensarling (R-Texas) congratulated Watt on his confirmation, but also challenged him to carry on DeMarco’s policies.
“It’s been five years since the financial crisis, which was caused in large part by federal policies that incented, mandated, and browbeat financial institutions to loan money to people to buy homes they ultimately could not afford,” he said in a statement. “It is… my hope that with a new FHFA Director, the Obama administration will work with us on the need to create a sustainable housing finance system for our nation.”
Watt’s bid to lead the FHFA was blocked earlier in 2013 by the GOP, who questioned his qualifications for the role—especially considering his political career.
“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), a Senate Banking Committee member, in a statement.
The Monday confirmation comes after Senate Majority Leader Harry Reid (D-Nev.) changed the threshold for the number of votes necessary to confirm judicial and executive nominees from 60 to a simple majority. The final vote confirming Watt was 57-41, largely along party lines.
Written by Alyssa Gerace