Mel Watt: Is Obama's Housing Nominee a Wall Street Lackey?

On May 1, a White House official stated that President Obama seeks to nominate Representative Mel Watt (D-N.C.) as the new director of the Federal Housing Finance Agency, which oversees taxpayer-owned mortgage corporations Fannie Mae and Freddie Mac. However, it appears that both Republicans and Democrats are not pleased with this nomination and could block Watt from this position. 

As an 11-term congressman, Watt would replace Edward J. DeMarco in this position. Watt has been a member of the Housing Financial Services Committee and has backed affordable-housing initiatives throughout his career. Obama feels that Watt’s experience on this committee, as well as his role in negotiating the Dodd-Frank Wall Street Reform Act’s passage, combine to make him a solid candidate for this new position.

“Mel has led efforts to rein in unscrupulous mortgage lenders, and he’s fought to give more Americans in lower-income neighborhoods access to affordable housing,” the president stated in a press conference the day he announced his nomination. “He knows better than anyone else what started the housing crisis and he knows what it’s going to take for responsible homeowners to fully recover.”

In response to the nomination, Senator Bob Corker (R-Tenn.) criticized Watt’s selection.  Corker feels that there should be a clear plan for the future of Fannie and Freddie, two companies that were both seized in 2008 to prevent bankruptcy, before any individual is nominated for this role.

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

While it is not a total shock that Republicans would not be in favor of Watt’s nomination, some Democrats are skeptical of him as well. They note that Watt has had close ties with the financial industry, and some of his main donors are also some of the nation’s largest banking interests. Between 1992 and 2013, three out of Watt’s five top contributors were Bank of America, the American Bankers Association, and Wachovia, according to OpenSecrets.org.

Furthermore, Watt opposed a bipartisan bill attempt by Representatives Alan Grayson (D-Fla.) and Ron Paul (R-Texas) to audit the Federal Reserve Bank in 2009. This audit attempt was looking to investigate who the Fed gave $2 trillion to, and under what circumstances.

If Republicans block Watt's nomination, it won't be the first time they do so with a FHFA director. In 2010, President Obama attempted to nominate North Carolina Commissioner of Banks Joseph Smith Jr. to replace DeMarco, but Republicans blocked him.  Since Watt has been getting bipartisan criticism – the Washington Post claims that Republicans “do not want to see a greater agency role in helping homeowners” whereas Democrats are questioning his ties with the banking industry – he ultimately might not be the man for the job.